Durand, Alex <br/><br/>
Structural Unemployment Rate in a Small Open Economy: The Case of Luxembourg 

 -  2005.<br/>							 
<br/><br/> 89 
<br/><br/> This article seeks to estimate the non-accelerating inflation rate of unemployment (NAIRU) for the small open economy of Luxembourg. In its reduced form, the wage- and price-setting model developed by Layard et al. (1991) allows a definition of the concept of NAIRU (OECD, 2000). Kuttner’s model (1994)–initially defined to determine a measure of potential output– provides a sufficient empirical framework for estimating the indicator(EcfinDG,2002). The estimates obtained tend to show that labor-market tensions, defined as deviations of effective unemployment from NAIRU, help to explain a share of inflation in Luxembourg.