Development
A classic statement regarding the natural rate appeared in Milton Friedman's 1968 Presidential Address to the American Economic Association :
- “At any moment of time, there is some level of unemployment which has the property that it is consistent with equilibrium in the structure of real wages … The ‘natural rate of unemployment’ … is the level that would be ground out by the Walrasian system of general equilibrium equations, provided there is embedded in them the actual structural characteristics of the labour and commodity markets, including market imperfections, stochastic variability in demands and supplies, the costs of gathering information about job vacancies, and labor availabilities, the costs of mobility, and so on.”
However, this remained a vision - Friedman never wrote down a model with all of these properties. When he illustrated the idea of the Natural Rate he simply used the standard text-book labor market demand and supply model that was essentially the same as Don Patinkin's model of the full employment. In this there is a competitive labor market with both labor supply and demand depend on the real wage and the natural rate is simply the competitive equilibrium where demand equals supply. Implicit in his vision is the notion that the Natural Rate is Unique: there is only one level of output and employment that is consistent with equilibrium.
Read more about this topic: Natural Rate Of Unemployment
Famous quotes containing the word development:
“America is a country that seems forever to be toddler or teenager, at those two stages of human development characterized by conflict between autonomy and security.”
—Anna Quindlen (b. 1952)
“I could not undertake to form a nucleus of an institution for the development of infant minds, where none already existed. It would be too cruel.”
—Henry David Thoreau (1817–1862)
“Dissonance between family and school, therefore, is not only inevitable in a changing society; it also helps to make children more malleable and responsive to a changing world. By the same token, one could say that absolute homogeneity between family and school would reflect a static, authoritarian society and discourage creative, adaptive development in children.”
—Sara Lawrence Lightfoot (20th century)