* =
[-1] = 2 respectively 5, so that the minimum wage unemployment of 0 associates with an equilibrium wage inflation path of 2, while the high minimum wage unemployment of 6 associates with a high wage inflation path of 5. Since
* =
[-1] the CWIRU’s can be found when f[u] = 0, and these result in values of 2.7 and 8.7 (= 2.7 + 6).
Figure 24: Dynamics: unemployment and inflation
Given the assumption of