In the U.S., unemployment insurance benefits, which are paid directly to individual workers, play an important role. In Japan, employment adjustment subsidies, which cover firms' wage payments, help firms hoard labor even during a recession. 2  The differences in labor market dynamics have affected developments in the inflation rates (Chart 4).
3  The natural rate of interest in modern macroeconomic theory  In order to highlight the key role of the natural interest rate concept in modern monetary theory, it is useful to recapitulate briefly the core structure of New-Keynesian models which form the workhorse of  1  Shackle, (1972),p. 336. 2  Shackle (1954).