NAIRU Definition & Meaning

nairu

or ��·�鱫

[ ney-roo ]

Phonetic (Standard)IPA

Economics.

nonaccelerating inflation rate of unemployment: the lowest level of unemployment an economy can handle without causing inflation.

NAIRU

/ ˈ�Բ�ɪ��ː /

non-accelerating inflation rate of unemployment: the rate of unemployment at which inflation is neither accelerating nor decelerating Also callednatural rate of unemployment

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Origin of nairu¹

First recorded in 1975–80; acronym

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If the jobless rate falls below NAIRU, the labor market gets too hot and inflation accelerates.

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If it rises above NAIRU, the labor market cools down and inflation decelerates.

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You might notice that both of these concepts—NAIRU and the sacrifice ratio—involve the labor market.

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Or, to put it another way: He thinks the problem is that the jobless rate is way below NAIRU.

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This is theoretical concept is known as the NAIRU—or the non-accelerating inflation rate of unemployment, if you don’t mind a mouthful.

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