Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84682
Authors: 
Batini, Nicoletta
Greenslade, Jennifer
Year of Publication: 
2003
Series/Report no.: 
External MPC Unit Discussion Paper 12
Abstract: 
This paper derives alternative measures of the short-run NAIRU (SRN) for the UK, the rate for unemployment at which inflation will neither increase nor decrease in the short-run. We estimate the NAIRU jointly with price equations by using the Kalman filter. Our work suggests that both structural changes in the labour market and favourable supply shocks may have had a beneficial impact on RPIX inflation over the last few years. We show that deviations of unemployment from the short-run NAIRU measures prove helpful in predicting inflation and we demonstrate their usefulness in Taylor-type policy rules for the interest rate.
Document Type: 
Working Paper

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