An Estimate of the Range of Equilibrium Rates of Unemployment for Australia

Abstract

This paper estimates the range of equilibrium rates of unemployment for Australia. The estimation technique nests a unique equilibrium rate of unemployment as a special case. It is found for the period 1965–97 that a range of equilibria of at least 6.6 percentage points of unemployment exists in Australia. The lower limit of this range, which is the minimum rate of unemployment consistent with non‐increasing inflation, was 2–3 per cent in the 1960s, jumped in the early 1970s and was about 5.6 per cent during the 1990s.