What is the natural rate of unemployment?
The natural rate of unemployment, as I developed it, represents the level of unemployment that exists in an economy when inflation is stable. It's not a zero-unemployment rate; rather, it's the rate consistent with the ongoing search and matching processes in the labor market, coupled with the wage-setting behavior of firms and workers. Deviations from this rate, particularly in my later work, can signal structural issues or a lack of dynamism within the economy.
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