The NAIRU has disappeared; what should replace it?
In the United States, wages no longer vary with the unemployment rate; in the euro zone, prices no longer vary with unit labour costs; in both cases, in total, inflation no longer varies with unemployment. This eliminate s the concept of NAIRU (the unemployment rate that leads to stable inflation). What can we replace the NAIRU with? In the United States, if the unemployment rate no longer has an impact on wages, there is no substitute concept for the NAIRU; In the euro zone, if the unemployment rate has an impact on wages but not on prices, one can define a concept of unemployment rate that ensures stable profit margins.