An important role in promoting employment and participation in the labour market and aiming for levels and trends in pay that reconcile competitiveness with workers’ aspirations falls to both macroeconomic policies, aimed at restoring steady expansion of aggregate demand and the economy, and structural policies designed to remedy the age-old defects of the labour market and more generally of the  16  Picketty (2014).
The closer this parameter is to unity, the longer it takes for the inflation rate to return to its equilibrium level. For specifying the long run mean of inflation in a univariate time series model, the most naïve approach is to assume it to be constant for the whole sample period under consideration.