This estimate is consistent with most large-scale macroeconometric models and with the estimates of the NAIRU that underlie the economic and budget projections of both the Council of Economic Advisers and the Congressional Budget Office, but there is nonetheless legitimate uncertainty about the estimate of the NAIRU.
This uncertainty has been, in my view, an important consideration in the way monetary policy has responded to recent economic developments. Obviously, whether the NAIRU is closer to 4% or to 5% affects the difficulty associated with rebalancing supply and demand to contain the risk of higher inflation. But why has inflation remained moderate if there is persistent excess demand in the labor market?