THE CONCEPT of a natural unemployment rate has been central to most modern models of inflation and stabilization. According to these models, inflation will accelerate or decelerate depending on whether unemployment is below or above the natural rate, while any existing rate of inflation will continue if unemployment is at the natural rate. The natural rate is thus the minimum, and only, sustainable rate of unemployment, but the inflation rate is left as a choice variable for policymakers. Since complete price stability has attractive features, many economists and policymakers who accept the natural rate hypothesis believe that central banks should target zero inflation. We question the standard version of the natural rate model and each of these implications. Central to our analysis is the effect of downward nominal wage rigidity in an economy in which individual firms experience stochastic shocks in the demand for their output. We embed these features in a model that otherwise resembles a standard natural rate model and show there is no unique natural unemployment rate. Rather, the rate of unemployment that is consistent with steady inflation We would especially like to thank Neil Siegel, Justin Smith, and Jennifer Eichberger for invaluable research assistance. We are also grateful to Pierre Fortin, Harry Holzer, and Christina Romer for providing us with data, and to

This research has been supported by the Kauffman Foundation. Many facts and relationships highlighted here are based on my book in progress, Beyond the Rainbow: The American Standard of Living Since the Civil War, under contract to the Princeton University Press. To limit the scope of this short paper, only a limited number of historical references and citations are included here. All others are provided in the book manuscript. I am grateful to Marius Malkevicius and Andrew Sabene for their indispensable research assistance, and to David Warsh for helpful comments. This paper originates in a presentation that has been given to numerous audiences over the past year, and I am grateful to members of those audiences for asking provocative questions and making helpful suggestions in the Q&A sessions. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.© 2012 by Robert J. Gordon. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. ABSTRACTThis paper raises basic questions about the process of economic growth. It questions the assumption, nearly universal since Solow's seminal contributions of the 1950s, that economic growth is a continuous process that will persist forever. There was virtually no growth before 1750, and thus there is no guarantee that growth will continue indefinitely. Rather, the paper suggests that the rapid progress made over the past 250 years could well turn out to be a unique episode in human history. The paper is only about the United States and views the future from 2007 while pretending that the financial crisis did not happen. Its point of departure is growth in per-capita real GDP in the frontier country since 1300, the U.K. until 1906 and the U.S. afterwards. Growth in this frontier gradually accelerated after 1750, reached a peak in the middle of the 20th century, and has been slowing down since. The paper is about "how much further could the frontier growth rate decline?"The analysis links periods of slow and rapid growth to the timing of the three industrial revolutions (IR's), that is, IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity, internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present. It provides evidence that IR #2 was more important than the others and was largely responsible for 80 years of relatively rapid productivity growth between 1890 and 1972. Once the spin-off inventions from IR #2 (airplanes, air conditioning, interstate highways) had run their course, productivity growth during 1972-96 was muc...

Background Lecanemab (BAN2401), an IgG1 monoclonal antibody, preferentially targets soluble aggregated amyloid beta (Aβ), with activity across oligomers, protofibrils, and insoluble fibrils. BAN2401-G000-201, a randomized double-blind clinical trial, utilized a Bayesian design with response-adaptive randomization to assess 3 doses across 2 regimens of lecanemab versus placebo in early Alzheimer’s disease, mild cognitive impairment due to Alzheimer’s disease (AD) and mild AD dementia. Methods BAN2401-G000-201 aimed to establish the effective dose 90% (ED90), defined as the simplest dose that achieves ≥90% of the maximum treatment effect. The primary endpoint was Bayesian analysis of 12-month clinical change on the Alzheimer’s Disease Composite Score (ADCOMS) for the ED90 dose, which required an 80% probability of ≥25% clinical reduction in decline versus placebo. Key secondary endpoints included 18-month Bayesian and frequentist analyses of brain amyloid reduction using positron emission tomography; clinical decline on ADCOMS, Clinical Dementia Rating-Sum-of-Boxes (CDR-SB), and Alzheimer’s Disease Assessment Scale-Cognitive Subscale (ADAS-Cog14); changes in CSF core biomarkers; and total hippocampal volume (HV) using volumetric magnetic resonance imaging. Results A total of 854 randomized subjects were treated (lecanemab, 609; placebo, 245). At 12 months, the 10-mg/kg biweekly ED90 dose showed a 64% probability to be better than placebo by 25% on ADCOMS, which missed the 80% threshold for the primary outcome. At 18 months, 10-mg/kg biweekly lecanemab reduced brain amyloid (−0.306 SUVr units) while showing a drug-placebo difference in favor of active treatment by 27% and 30% on ADCOMS, 56% and 47% on ADAS-Cog14, and 33% and 26% on CDR-SB versus placebo according to Bayesian and frequentist analyses, respectively. CSF biomarkers were supportive of a treatment effect. Lecanemab was well-tolerated with 9.9% incidence of amyloid-related imaging abnormalities-edema/effusion at 10 mg/kg biweekly. Conclusions BAN2401-G000-201 did not meet the 12-month primary endpoint. However, prespecified 18-month Bayesian and frequentist analyses demonstrated reduction in brain amyloid accompanied by a consistent reduction of clinical decline across several clinical and biomarker endpoints. A phase 3 study (Clarity AD) in early Alzheimer’s disease is underway. Trial registration Clinical Trials.govNCT01767311.

This paper estimates the NAIRU (standing for the~on-~ccelerating Inflation Rate of unemployment) as a parameter that varies over time. The NAIRU is the unemployment rate that is consistent with a constant rate of inflation. Its value is determined in an econometric model in which the inflation rate depends on its own past values ("inertia"), demand shocks proxied by the difference between the actual unemployment rate and the estimated NAIRU, and a set of supply shock variables. The estimated NAIRU for the U.S. economy differs somewhat for alternative measures of the inflation rate. The NAIRU estimated for the GDP deflator varies over the past forty years within the narrow range of 5.7 to 6.4 percent; its estimated value for the most recent quarter(1996:Q1) is 5.7 percent. In that quarter a lower NAIRU of 5.3 percent is obtained for the chain-weighted PCE deflator. Recent research claiming that there is a three-percentage-point range of uncertainty about the NAIRU is rejected as inconsistent with the behavior of the American economy in the late 1980s and early 1990s.