I think, and I believe that DeLong would agree, that a big reason for the movement in the NAIRU is productivity. When productivity growth is below trend, as it was in the 1970's and 1980's, workers' wage demands are unrealistically high. When productivity growth is higher, firms can raise real wages and still maintain high levels of employment.

Discussion Question. How would a strengthening dollar have contributed to lowering the NAIRU?

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