The Natural Rate Hypothesis has been around us for … since Freidman presidential adress (1968?). Economists know that the definition lies on shaky grounds.
“In technical terms, many economists – including the ones who run the Fed – believe that pushing unemployment below a certain level will cause wages and prices to rise. They call that level the natural rate of unemployment. And Mr. Williams thinks recent disruptions, which have left some workers ill equipped to find new jobs, have raised that rate as much as 1.5 percentage points (In a February research note, Mr. Williams and a co-author calculated that the rate might have climbed as high as 6.7 percent.)” writes BINYAMIN APPELBAUM in the NYT. *
Well, I prefer my practical definition:
Supernatural Rate = Actual Rate – Natural rate
Who would say that this is not the case!
New data on the Superrnatural rate are coming out pretty soon.
* Inflation and Joblessness: The Tipping Point – NYTimes.com.
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