548 - The NAIRU and Inflation: An empiral analyses for the Netherlands

Wetenschappelijke publicatie
Date 28 July 1998

This study explores whether the NAIRU is a useful indicator of prospects for inflation in the Netherlands. Apart from an empirical investigation, a review of the literature and various theories underlying the concept of the NAIRU are presented. The empirical results show that it is difficult to obtain robust estimates of the NAIRU for the Netherlands. Moreover, for short horizons (two years or less) inflation forecasts turn out to be quite invariant to changes in the level of the NAIRU. It is concluded that the NAIRU is not a very reliable information variable for monetary policy. Key words: inflation, NAIRU, Phillips curve