OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

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The NAIRU in Japan

Measurement and Its Implications

The NAIRU is estimated by using the Japanese data. There are three major findings. The NAIRU has been increasing modestly since 1970. Unlike the standard specification adopted in many OECD countries it can be estimated more precisely when the unemployment rate with a several-quarter lead is used. Hysteresis or “speed limit” effects are also detected. These findings lead to the following implications. Structural reform in the labor market should be pursued. Seeking for alternative labor market indicators which move ahead of inflation will be useful. Macroeconomic policy aimed at rapidly reducing unemployment could be costly in terms of inflation ...


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