Author: Nahuis N.J.

Source: Applied Economics, Volume 35, Number 11, 20 July 2003 , pp. 1339-1344(6)

Publisher: Routledge, part of the Taylor & Francis Group

Abstract:

This article examines the usefulness of the NAIRCU, the 'non-accelerating inflation rate of capacity utilization' as a demand indicator of inflation for eight European countries. So far the NAIRCU has been estimated for the USA only, where it serves as a useful indicator for inflation. In most European countries, deviations from the equilibrium level of capacity utilization influence inflation significantly. Further, the results not only indicate that in more recent periods the NAIRCU has shifted upward, indicating higher efficiency of the production process, but also that confidence intervals have increased over time reducing the usefulness of the NAIRCU somewhat.

Document Type: Research article

DOI: http://dx.doi.org/10.1080/0003684032000095947

Affiliations: 1: De Nederlandsche Bank, Monetary and Economic Policy Department

Publication date: 2003-07-20

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