Kevin Murphy Interviewed
By Arnold Kling
Definitely worth reading, with a variety of topics covered. On one topic, he says
It’s difficult to look at, for example, the very low unemployment rates we saw in the early 2000s and say that represented an economy in which everyone was working. Unemployment rates were at roughly the same level that they were in the late 1960s, but if you look at prime-age males, the fraction actually working who were, say, 30 to 40 years old was quite a bit lower in 2001 because there was a big increase in the number who were out of the labor force in that age category.
See also my essay from 2003.
The reason that this is important is that the Taylor Rule, which supposedly measures whether monetary policy is too loose or too tight, typically uses the unemployment rate. However, the unemployment rate understated the slack in the labor market in 2001-2003, when Taylor and others claim that monetary policy was too expansionary.