How to Calculate NAIRU

••• TommL/E+/GettyImages

The Non-Accelerating-Inflation Rate of Unemployment (NAIRU) is a measure of much unemployment would change in a given year independent of inflation. That is to say how much unemployment would change with no upward or downward pressure from inflation. Calculating the NAIRU requires data on both the yearly inflation rate and unemployment rate over a period of time and preferably some kind of statistical software.

    Take the data for inflation and unemployment and graph the unemployment rate against inflation lagged one year and enter it into whatever software you are using.

    Find the line of best fit. Ordinary least squares regression is suitable for this. The curve you find is known as the Phillips curve.

    Find the slope of the Phillips curve.

    Subtract the slope of the Phillips curve from the unemployment rate of the year you are trying to calculate the NAIRU for.

    The resulting number is the NAIRU.

    Things You'll Need

    • Data on inflation or unemployment
    • Statistical software (Stata, SPSS, Eviews or even Excel)

Related Articles

How to Find a Z Score
How to Find the Slope of a Plotted Line With the TI-84...
How to Find Y Value for the Slope of a Line
How to Determine the Y-Intercept of a Trend Line
How to Find the Midpoint of the Interval
How to Find Correlation Coefficient & Coefficient of...
How to Calculate Logit
How to Calculate a Growth Trend
How to Calculate Asphalt Prices
Test Your Knowledge on Middle School Science
How to Calculate Regression Coefficient
How to Find a Maximum Value for a Polynomial
How to Calculate Price Per Share of Common Stock
How to Calculate Variance From a Ti84
How to Calculate the Mean in a Probability Distribution
How to Make a Relative Frequency Table
How to Calculate Yearly Averages
How to Calculate Sharpe Ratio
How to Write a Linear Regression Equation
How to Calculate Percent of Return

Dont Go!

We Have More Great Sciencing Articles!