Estimating NAIRU for Subgroups of Civilian Population with Flexible Fourier Form

Abstract This paper presents evidence that the relationship between price levels and unemployment varies across subgroups of the civilian population. Based on the time-evolving subgroup-specific Ball-Mankiw decomposition, we propose to model the subgroup non-accelerating inflation rate of unemployment (NAIRU) using the Flexible Fourier Form with a small number of low-frequency components. Several empirical regularities of the disaggregate NAIRU are documented including how the Great Recession affects subgroups differently.