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Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
NAIRU uncertainty and nonlinear policy rules
Laurence H. Meyer
Eric T. Swanson
Volker W. Wieland
Abstract

Meyer (1999) has suggested that episodes of heightened uncertainty about the NAIRU may warrant a nonlinear policy response to changes in the unemployment rate. This paper offers a theoretical justification for such a nonlinear policy rule, and provides some empirical evidence on the relative performance of linear and nonlinear rules when there is heightened uncertainty about the NAIRU.


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Laurence H. Meyer & Eric T. Swanson & Volker W. Wieland, NAIRU uncertainty and nonlinear policy rules, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2001-01, 2001.
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Keywords: Inflation (Finance) ; Unemployment
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