Since the 1990s, Australia, like other OECD countries, has deployed active labour market policies (ALMPs) to assist unemployed individuals into employment. Extant scholarship in economics and other disciplines demonstrates the limitations of ALMPs, particularly for individuals who are long-term unemployed and with multiple, complex barriers to employment. Critiques hinge on the limitations of the predominant supply-side approach focused on case management and preparing individuals for employment without accounting for the behaviours and practices of the demand-side (employers). This article argues that a reorienting of ALMPs towards the demand side is urgently required and proposes a blueprint to take this forward.
{"title":"The Case for Reorienting Active Labour Market Policies Towards the Demand-Side","authors":"Jo Ingold, Jakhongir Kakhkharov, Qian Yi Lee","doi":"10.1111/1467-8462.70035","DOIUrl":"https://doi.org/10.1111/1467-8462.70035","url":null,"abstract":"<div>\u0000 \u0000 <p>Since the 1990s, Australia, like other OECD countries, has deployed active labour market policies (ALMPs) to assist unemployed individuals into employment. Extant scholarship in economics and other disciplines demonstrates the limitations of ALMPs, particularly for individuals who are long-term unemployed and with multiple, complex barriers to employment. Critiques hinge on the limitations of the predominant supply-side approach focused on case management and preparing individuals for employment without accounting for the behaviours and practices of the demand-side (employers). This article argues that a reorienting of ALMPs towards the demand side is urgently required and proposes a blueprint to take this forward.</p>\u0000 </div>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 4","pages":"326-331"},"PeriodicalIF":1.0,"publicationDate":"2025-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145659727","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The interwar period saw a reversal of the first wave of globalization, with rising trade and migration barriers. Understanding this shift helps contextualize today's backlash against global integration.
Methods
We document trade and migration trends, analyse policies that dismantled globalization, and review literature on their effects on workers, industries, and economies. Historical and comparative analysis links past protectionist cycles with current trends.
Results
Protectionist policies during the interwar period disrupted trade and migration, leaving lasting economic and labour market impacts. Historical patterns parallel contemporary moves toward reduced openness.
Conclusion
This study highlights the risks of protectionist cycles and provides historical context for current challenges to global integration, informing policy responses to sustain international economic cooperation.
{"title":"Trade Wars and Immigration Restrictions: Insights From the Interwar Era","authors":"Dean Hoi, Ruikun Ma, Laura Panza","doi":"10.1111/1467-8462.70037","DOIUrl":"https://doi.org/10.1111/1467-8462.70037","url":null,"abstract":"<div>\u0000 \u0000 \u0000 <section>\u0000 \u0000 <h3> Background</h3>\u0000 \u0000 <p>The interwar period saw a reversal of the first wave of globalization, with rising trade and migration barriers. Understanding this shift helps contextualize today's backlash against global integration.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Methods</h3>\u0000 \u0000 <p>We document trade and migration trends, analyse policies that dismantled globalization, and review literature on their effects on workers, industries, and economies. Historical and comparative analysis links past protectionist cycles with current trends.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Results</h3>\u0000 \u0000 <p>Protectionist policies during the interwar period disrupted trade and migration, leaving lasting economic and labour market impacts. Historical patterns parallel contemporary moves toward reduced openness.</p>\u0000 </section>\u0000 \u0000 <section>\u0000 \u0000 <h3> Conclusion</h3>\u0000 \u0000 <p>This study highlights the risks of protectionist cycles and provides historical context for current challenges to global integration, informing policy responses to sustain international economic cooperation.</p>\u0000 </section>\u0000 </div>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 4","pages":"343-352"},"PeriodicalIF":1.0,"publicationDate":"2025-11-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145659575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article (i) provides a brief history of how the employment services system in Australia has come to fail jobseekers with high barriers to employment; (ii) presents an overview of the elements of a successful programme for those jobseekers; and (iii) makes recommendations on how to make progress on improving the system for delivery of employment services, building from the Hill report'.
{"title":"Employment Services for Jobseekers Needing Substantial Assistance: How We Got to Where We Are and How to Make Progress","authors":"Jeff Borland","doi":"10.1111/1467-8462.70036","DOIUrl":"https://doi.org/10.1111/1467-8462.70036","url":null,"abstract":"<div>\u0000 \u0000 <p>This article (i) provides a brief history of how the employment services system in Australia has come to fail jobseekers with high barriers to employment; (ii) presents an overview of the elements of a successful programme for those jobseekers; and (iii) makes recommendations on how to make progress on improving the system for delivery of employment services, building from the Hill report'.</p>\u0000 </div>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 4","pages":"332-342"},"PeriodicalIF":1.0,"publicationDate":"2025-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145659712","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Australia's long-term economic prosperity is fundamentally tied to productivity growth, yet recent decades have seen a pronounced slowdown with significant implications for living standards and intergenerational mobility. This article examines a policy framework that integrates economic efficiency with social equity. It identifies three critical domains for policy intervention: investment in individuals, through enhanced skills, health, and labour market inclusivity; investment in infrastructure, encompassing both physical systems such as housing and digital platforms essential for technological adoption; and investment in institutions, including robust competition policy, regulatory reform, and evidence-based public administration. Drawing on recent empirical evidence and policy developments, the article proposes that sustained, inclusive productivity growth is not merely an economic objective but a social necessity, one that underpins rising real incomes, reduces inequality and ensures long-run fiscal sustainability.
{"title":"The Progressive Productivity Agenda","authors":"Andrew Leigh","doi":"10.1111/1467-8462.70034","DOIUrl":"https://doi.org/10.1111/1467-8462.70034","url":null,"abstract":"<div>\u0000 \u0000 <p>Australia's long-term economic prosperity is fundamentally tied to productivity growth, yet recent decades have seen a pronounced slowdown with significant implications for living standards and intergenerational mobility. This article examines a policy framework that integrates economic efficiency with social equity. It identifies three critical domains for policy intervention: investment in individuals, through enhanced skills, health, and labour market inclusivity; investment in infrastructure, encompassing both physical systems such as housing and digital platforms essential for technological adoption; and investment in institutions, including robust competition policy, regulatory reform, and evidence-based public administration. Drawing on recent empirical evidence and policy developments, the article proposes that sustained, inclusive productivity growth is not merely an economic objective but a social necessity, one that underpins rising real incomes, reduces inequality and ensures long-run fiscal sustainability.</p></div>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 4","pages":"317-324"},"PeriodicalIF":1.0,"publicationDate":"2025-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145659702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This policy forum examines the Australian NAIRU, a key measure in describing the relationship between labour market slack and inflation, through four complementary lenses. First, Borland and Harris evaluate the RBA's dashboard-style, narrative approach to gauging labour-market slack. Second, Ballantyne and Cusbert estimate a state-space model that points to a current NAIRU near 5% and weaker feedback from past inflation. Third, Gross tests alternative state-space specifications, clustering the NAIRU in the 4%–5% range and supporting a 4.5% benchmark. Finally, Dawkins and Garnaut propose a pragmatic test: tighten conditions until wage pressure lifts inflation. Together, the papers compare methods, weigh the evidence, and set out the policy trade-offs in today's NAIRU debate.
{"title":"Introduction to the Policy Forum on the NAIRU","authors":"Sarantis Tsiaplias","doi":"10.1111/1467-8462.70032","DOIUrl":"https://doi.org/10.1111/1467-8462.70032","url":null,"abstract":"<p>This policy forum examines the Australian NAIRU, a key measure in describing the relationship between labour market slack and inflation, through four complementary lenses. First, Borland and Harris evaluate the RBA's dashboard-style, narrative approach to gauging labour-market slack. Second, Ballantyne and Cusbert estimate a state-space model that points to a current NAIRU near 5% and weaker feedback from past inflation. Third, Gross tests alternative state-space specifications, clustering the NAIRU in the 4%–5% range and supporting a 4.5% benchmark. Finally, Dawkins and Garnaut propose a pragmatic test: tighten conditions until wage pressure lifts inflation. Together, the papers compare methods, weigh the evidence, and set out the policy trade-offs in today's NAIRU debate.</p>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 3","pages":"222-223"},"PeriodicalIF":1.0,"publicationDate":"2025-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8462.70032","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145181541","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
<p>Genuine full employment is a pivotal economic objective around which others move. It has important implications for distributional equity and raises productivity. Keeping the economy at the highest rate of labour utilisation possible, without domestic inflationary pressures pushing inflation consistently above the target range, will tend to reduce the non-accelerating rate of unemployment (NAIRU) over time, raise labour force participation and raise national incomes and output. It also reduces the budget deficit by reducing government spending and raising government revenue.<sup>1</sup></p><p>It is wise to implement policies to reduce the NAIRU to the lowest level consistent with avoiding inflation accelerating above the target range and staying there, and to operate the economy with unemployment at the NAIRU. Various microeconomic policies can lower the NAIRU by improving the matching of labour demand and labour supply, and enhancing the performance of the education and training system. Macroeconomic policy can reduce the NAIRU by steadily increasing aggregate demand through moderate monetary and fiscal policy when inflation and inflation expectations are in the target range of 2–3 per cent (or approaching that range from above) and reducing unemployment until wage pressures in the labour market are starting to cause an acceleration of inflation persistently to above the target range. This was implicitly the approach to macroeconomic policy for a short period in the early 2020s when unemployment was reduced to 3.4 per cent.</p><p>We recommend adopting that approach now, alongside policies to improve the efficiency of the labour market. That is the best way to reduce the NAIRU and to find out what it is. The alternative approach, relying on econometric estimates using historical data, can only provide ballpark estimates of where the NAIRU has been in the past and may differ significantly from the lowest levels consistent with avoiding acceleration of inflation in current circumstances.</p><p>The NAIRU concept was introduced in the mid-1970s by Modigliani and Papademos (<span>1975</span>) as an alternative to the older concept of the ‘natural rate of unemployment’. It was defined as the level of unemployment below which price expectations would fuel wage rises that led to accelerating inflation.</p><p>Australian econometric estimates of the NAIRU in the 1980s and 1990s had increased in the 1970s and were of the order of 5–7 per cent (Gruen et al. <span>1999</span>). It was understood that inflation expectations had increased and been built into wage setting. Labour market institutions at that time encouraged wage-price spirals. The Accord, followed by a period of labour market reforms and reductions in union power changed the wage-setting environment. This and sustained low inflation after the deep recession of 1990–91 produced lower econometric estimates, which have been in the range of 4–5 per cent in recent times (Australian Treasury <span>2
真正的充分就业是其他经济目标的关键。它对分配公平和提高生产率具有重要意义。在没有国内通胀压力推动通胀持续高于目标区间的情况下，将经济保持在尽可能高的劳动力利用率，随着时间的推移，将倾向于降低非加速失业率（NAIRU），提高劳动力参与率，提高国民收入和产出。它还通过减少政府支出和增加政府收入来减少预算赤字。将NAIRU降低到与避免通胀超过目标区间相一致的最低水平，并以NAIRU为失业率来运行经济，这是明智的。各种微观经济政策可以通过提高劳动力需求和劳动力供给的匹配度，提高教育培训体系的绩效来降低NAIRU。宏观经济政策可以通过以下方式降低NAIRU：当通胀和通胀预期处于2%至3%的目标范围内（或接近上述范围）时，通过温和的货币和财政政策稳步增加总需求，并降低失业率，直到劳动力市场的工资压力开始导致通胀持续加速至目标范围以上。在本世纪20年代初失业率降至3.4%的短期内，这无疑是宏观经济政策的做法。我们建议现在就采取这种做法，同时出台提高劳动力市场效率的政策。这是减少NAIRU并找出它是什么的最好方法。另一种方法，依赖于使用历史数据的计量经济学估计，只能提供过去NAIRU的大致估计，并且可能与当前情况下避免通货膨胀加速的最低水平有很大差异。NAIRU概念是在20世纪70年代中期由Modigliani和Papademos（1975）提出的，作为旧概念“自然失业率”的替代方案。它被定义为失业率水平，低于该水平的价格预期将推动工资上涨，从而导致通货膨胀加速。澳大利亚对1980年代和1990年代NAIRU的计量经济学估计在1970年代有所增加，约为5 - 7% （Gruen et al. 1999）。据了解，通胀预期有所上升，并已纳入工资设定。当时的劳动力市场制度鼓励工资-价格螺旋式上升。该协议之后是一段时间的劳动力市场改革和工会力量的削弱，改变了工资设定的环境。这种情况以及1990-91年深度衰退后持续的低通胀导致了较低的计量经济学估计，最近一直在4 - 5%的范围内（澳大利亚财政部2021年；Heather等人2021年）。计量经济学估计只能提供大概的估计，可能与当前的NAIRU有很大不同。宏观经济政策（结合提高劳动力市场效率的微观经济政策）的目标应该是在不造成劳动力市场压力的情况下，使失业率尽可能低，而这种压力可能会导致通货膨胀加速超过目标范围。我们同意澳大利亚央行前助理行长在2019年弗里贝恩演讲中的声明，“我们知道，当工资压力推高通胀时，我们的失业率低于NAIRU”（Ellis 1999）。为应对COVID - 19大流行采取的财政和货币对策导致失业率在一年多的时间里保持在3.5%左右，降至3.4%的低点，但没有造成工资通胀上涨的压力。随后的通胀飙升，主要是由全球产品市场需求强劲、供应中断时的外部冲击造成的。压低失业率的“自然实验”，直到来自劳动力市场的通胀压力显示，NAIRU被终止，以避免外源性价格冲击传导到持续的国内通胀。我们还不知道，3.4%或更低的失业率能否在不造成经济上不合理的工资压力的情况下维持下去。我们只能通过执行持续降低失业率的政策来找到答案，直到出现明显的通胀压力开始出现的迹象。如果这种情况在失业率达到3.5%左右之前发生，我们会感到惊讶。图1显示了菲利普斯曲线在2016年之后是如何向下平移的（Borland 2023）。与任何特定劳动力利用率水平相关的工资压力已显著下降。澳大利亚储备银行（Reserve Bank of Australia， RBA）当时似乎没有理解这一点，在过去7年多的时间里，它一个季度接一个季度地预测工资通胀远高于实际水平（2013 - 2020年）。 这导致货币政策比充分就业更紧缩，通货膨胀持续低于目标范围（图2）。失业率仍然远高于NAIRU（图2），在大流行病冲击之前，失业率非常缓慢地降至5%左右。2021年，当新冠疫情爆发、失业率飙升时，各国采取了强有力的财政和货币政策应对措施。这使得失业率在一年半的时间里降至远低于4%的平均水平，在没有任何工资突破迹象的情况下降至3.4%的低点。2021/2022年，2019冠状病毒病（COVID - 19）供应链效应和俄乌战争带来的外源性价格冲击导致价格大幅上涨。按年计算，所有组别和经调整后的平均CPI均达到约7%至8%（图2）。没有迹象表明通胀压力源自劳动力市场。自2022年以来，WPI每年上涨3.2%或以上，可归因于此前CPI大幅上涨的滞后调整。工资涨幅相对温和，峰值为4.3%。实际工资大幅下降（图3）。实际工资直到最近才开始收复失地，在这种情况下，实体经济的发展并不表明均衡实际工资会下降。WPI目前的年增长率为3.4%，而CPI现在已回到2%至3%的目标区间。当工资通胀达到4.2%的峰值时，物价通胀也在稳步下降，目前为4.2%。自那时以来，工资和物价通胀一直呈下降趋势。2025年3月季度WPI小幅上升是由特定的企业协议造成的，尤其是在老年护理和儿童保育领域，而且不是广泛的。这一增长得到了政府的支持，因为这是由于长期而非周期性的短缺。6月份当季WPI涨幅保持在3.4%。在未来几个月和几年里，继续监测工资通胀非常重要。目前还没有证据表明，如果失业率低于NAIRU，通胀预期的上升会推动工资上涨，并引发工资-价格螺旋上升。图2中的数据告诉我们，失业率高于NAIRU。图3显示了不同工资设定过程对WPI增长的贡献。在工资涨幅略高于物价涨幅的这一时期，个人协议的贡献最大，其次是企业议价协议，最后是奖励。个别协议首先上升，因为它们对经济环境的反应最快。然而，所有这三种类型现在都呈下降趋势，尽管2025年3月EBA系列略有逆转，这是由于一些新的基于州的护理行业协议。本文强调了真正的充分就业在实现经济的全部潜力方面的核心地位。人们注意到，自1970年代和1980年代初达到最高水平以来，NAIRU已大幅下降。经济政策当局应通过结合微观经济和宏观经济政策，继续减少NAIRU。微观经济包括提高劳动力市场效率的政策。宏观经济涉及稳步降低失业率，直到失业率降至通胀压力威胁到我们将通胀率维持在2%至3%目标区间的能力的水平。我们知道，当劳动力市场的通胀压力将通胀推高至目标区间上方并保持在该水平时，我们已经达到了当前的NAIRU水平。我们可以借鉴最近的一项政策试验。针对COVID-19大流行爆发的财政和货币政策应对措施导致失业率在很长一段时间内远低于4%，低至3.4%。当时的宏观经济政策似乎对降低失业率感到满意，直到劳动力市场出现通胀压力。通胀压力并未出现。这应该会让人们相信，失业率可以再次降至3.4%，而不会冒着通胀加速升至目标区间上方的风险。2021年至2022年，大流行病造成的供应链中断和俄罗斯-乌克兰战争造成的外源性价格冲击，导致在总需求强劲之际爆发了价格通胀。可以理解，但太长时间以来，澳大利亚央行终止了这一政策试验。利率大幅提高。物价通胀的爆发导致工资增长滞后于往常，尽管实际工资大幅下降。最终，物价通胀回落至央行的目标区间。工资涨幅也有所回落，目前约为3.4%。 实际工资已开始上涨，但要恢复到大流行前的水平还需要许多年的时间。储备银行在2025年初开始放松货币政策以降低利率。它们仍然高于中性利率，如果要恢复NAIRU的失业率
{"title":"Reducing the NAIRU and Achieving Full Employment","authors":"Ross Garnaut, Peter Dawkins","doi":"10.1111/1467-8462.70033","DOIUrl":"https://doi.org/10.1111/1467-8462.70033","url":null,"abstract":"<p>Genuine full employment is a pivotal economic objective around which others move. It has important implications for distributional equity and raises productivity. Keeping the economy at the highest rate of labour utilisation possible, without domestic inflationary pressures pushing inflation consistently above the target range, will tend to reduce the non-accelerating rate of unemployment (NAIRU) over time, raise labour force participation and raise national incomes and output. It also reduces the budget deficit by reducing government spending and raising government revenue.<sup>1</sup></p><p>It is wise to implement policies to reduce the NAIRU to the lowest level consistent with avoiding inflation accelerating above the target range and staying there, and to operate the economy with unemployment at the NAIRU. Various microeconomic policies can lower the NAIRU by improving the matching of labour demand and labour supply, and enhancing the performance of the education and training system. Macroeconomic policy can reduce the NAIRU by steadily increasing aggregate demand through moderate monetary and fiscal policy when inflation and inflation expectations are in the target range of 2–3 per cent (or approaching that range from above) and reducing unemployment until wage pressures in the labour market are starting to cause an acceleration of inflation persistently to above the target range. This was implicitly the approach to macroeconomic policy for a short period in the early 2020s when unemployment was reduced to 3.4 per cent.</p><p>We recommend adopting that approach now, alongside policies to improve the efficiency of the labour market. That is the best way to reduce the NAIRU and to find out what it is. The alternative approach, relying on econometric estimates using historical data, can only provide ballpark estimates of where the NAIRU has been in the past and may differ significantly from the lowest levels consistent with avoiding acceleration of inflation in current circumstances.</p><p>The NAIRU concept was introduced in the mid-1970s by Modigliani and Papademos (<span>1975</span>) as an alternative to the older concept of the ‘natural rate of unemployment’. It was defined as the level of unemployment below which price expectations would fuel wage rises that led to accelerating inflation.</p><p>Australian econometric estimates of the NAIRU in the 1980s and 1990s had increased in the 1970s and were of the order of 5–7 per cent (Gruen et al. <span>1999</span>). It was understood that inflation expectations had increased and been built into wage setting. Labour market institutions at that time encouraged wage-price spirals. The Accord, followed by a period of labour market reforms and reductions in union power changed the wage-setting environment. This and sustained low inflation after the deep recession of 1990–91 produced lower econometric estimates, which have been in the range of 4–5 per cent in recent times (Australian Treasury <span>2","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 3","pages":"246-250"},"PeriodicalIF":1.0,"publicationDate":"2025-09-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8462.70033","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145181540","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article examines the concept of the non-accelerating inflation rate of unemployment (NAIRU) and its application in Australia. We review its theoretical origins, international and domestic development, and the Reserve Bank of Australia's model-based estimation approach. Using three different NAIRU models, we evaluate whether recent labour market outcomes support a lower NAIRU than the Bank's published 4.5 per cent benchmark. The findings suggest that while some indicators point to a modest decline, the central estimate remains near the RBA's official figure.
{"title":"The NAIRU in Australia","authors":"Isaac Gross","doi":"10.1111/1467-8462.70031","DOIUrl":"https://doi.org/10.1111/1467-8462.70031","url":null,"abstract":"<p>This article examines the concept of the non-accelerating inflation rate of unemployment (NAIRU) and its application in Australia. We review its theoretical origins, international and domestic development, and the Reserve Bank of Australia's model-based estimation approach. Using three different NAIRU models, we evaluate whether recent labour market outcomes support a lower NAIRU than the Bank's published 4.5 per cent benchmark. The findings suggest that while some indicators point to a modest decline, the central estimate remains near the RBA's official figure.</p>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 3","pages":"242-245"},"PeriodicalIF":1.0,"publicationDate":"2025-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8462.70031","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145181520","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The introduction of inflation targeting has seen long-term inflation expectations become much more anchored than when models of the non-accelerating inflation rate of unemployment (NAIRU) were conceived. This changes how we should interpret the NAIRU and inflation dynamics over the short-to-medium term. We update the model in Cusbert (2017) to allow for structural breaks upon the introduction of inflation targeting in Australia, finding long-term expectations have become relatively more important for inflation dynamics, and inflation has become less volatile. We use the model to conduct scenarios that highlight the importance of expectations formation for short-to-medium run inflation dynamics. The scenarios illustrate how anchored inflation expectations improve the short-run trade-off between inflation and unemployment and change inference about the NAIRU – observing falling inflation or wage growth cannot be used to infer that unemployment is above the NAIRU.
{"title":"The NAIRU Under Anchored Inflation Expectations","authors":"Alexander Ballantyne, Tom Cusbert","doi":"10.1111/1467-8462.70027","DOIUrl":"https://doi.org/10.1111/1467-8462.70027","url":null,"abstract":"<div>\u0000 \u0000 <p>The introduction of inflation targeting has seen long-term inflation expectations become much more anchored than when models of the non-accelerating inflation rate of unemployment (NAIRU) were conceived. This changes how we should interpret the NAIRU and inflation dynamics over the short-to-medium term. We update the model in Cusbert (2017) to allow for structural breaks upon the introduction of inflation targeting in Australia, finding long-term expectations have become relatively more important for inflation dynamics, and inflation has become less volatile. We use the model to conduct scenarios that highlight the importance of expectations formation for short-to-medium run inflation dynamics. The scenarios illustrate how anchored inflation expectations improve the short-run trade-off between inflation and unemployment and change inference about the NAIRU – observing falling inflation or wage growth cannot be used to infer that unemployment is above the NAIRU.</p></div>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 3","pages":"224-235"},"PeriodicalIF":1.0,"publicationDate":"2025-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145181518","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article reviews the RBA's use of indicators (descriptive information) to assess spare capacity and full employment in Australia's labour market. Three main topics are addressed: the choice of indicators; how to interpret the meaning of each indicator for assessing spare capacity; and how to aggregate information from the indicators to come to an overall judgement on the state of the labour market.
{"title":"The RBA's (Dashboard) Indicator Approach","authors":"Jeff Borland, David Harris","doi":"10.1111/1467-8462.70030","DOIUrl":"https://doi.org/10.1111/1467-8462.70030","url":null,"abstract":"<p>This article reviews the RBA's use of indicators (descriptive information) to assess spare capacity and full employment in Australia's labour market. Three main topics are addressed: the choice of indicators; how to interpret the meaning of each indicator for assessing spare capacity; and how to aggregate information from the indicators to come to an overall judgement on the state of the labour market.</p>","PeriodicalId":46348,"journal":{"name":"Australian Economic Review","volume":"58 3","pages":"236-241"},"PeriodicalIF":1.0,"publicationDate":"2025-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/1467-8462.70030","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145181505","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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