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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (404)	7/20/2000 4:03:44 PM
From: Justa Werkenstiff	Respond to of 10065

Greenspan and NAIRU Greenspan-don't think jobless rate has to rise WASHINGTON, July 20 (Reuters) - Federal Reserve Chairman Alan Greenspan said on Thursday he did not think the U.S. unemployment rate, currently near a three-decade low, needs to move higher in order to prevent a rise in inflation. "I think the evidence indicating that the need to raise the unemployment rate to stabilize prices is unpersuasive, in my judgment," Greenspan told the Senate Banking Committee. The U.S. unemployment rate now stands at 4 percent. During his semi-annual monetary testimony to Congress, Greenspan said he had doubts about the validity of a long-held economic theory that there is a particular level of unemployment below which inflation will start to flare up. Greenspan noted there was very heated debate within the economic profession about the so-called non-accelerating inflation rate of unemployment, or NAIRU, viewed as the level below which inflationary dangers would build. "My forecast is that the NAIRU, which served as a very useful statistical procedure to evaluate how the economy was behaving over a number of years like so many types of temporary models which worked, is probably going to fail in the years ahead," he said. Although he emphasized he suspected that the jobless rate at 4 percent would not lead to inflation, the Fed chief noted that it was still an open question within the economic field. 12:13 07-20-00