Introduction to the Policy Forum on the NAIRU

This policy forum examines the Australian NAIRU, a key measure in describing the relationship between labour market slack and inflation, through four complementary lenses. First, Borland and Harris evaluate the RBA's dashboard‐style, narrative approach to gauging labour‐market slack. Second, Ballantyne and Cusbert estimate a state‐space model that points to a current NAIRU near 5% and weaker feedback from past inflation. Third, Gross tests alternative state‐space specifications, clustering the NAIRU in the 4%–5% range and supporting a 4.5% benchmark. Finally, Dawkins and Garnaut propose a pragmatic test: tighten conditions until wage pressure lifts inflation. Together, the papers compare methods, weigh the evidence, and set out the policy trade‐offs in today's NAIRU debate.