For example, in 1997 and 1998, the decline in both oil prices and non-oil import prices significantly reinforced the direct disinflationary effect of the acceleration in productivity, contributing to a decline in overall CPI inflation to just 1.6 percent in 1998.
During most of this period, the unemployment rate, though falling, may have remained above the short-run NAIRU - as depicted in Figure 3 - because the shortrun NAIRU was declining as a result of the acceleration in productivity.