This level is consistent with aggregate production in the absence of various temporary frictions such as incomplete price adjustment in labor and goods markets.
[3] Reductions in the natural rate of unemployment must, according to the concept, be achieved through structural policies directed towards an economy's supply side.
According to multiple surveys, two-thirds to three-quarters of economists generally agree with the statement, "There is a natural rate of unemployment to which the economy tends in the long run.
"[4][5] While Friedrich von Hayek had argued attempts to create full employment might trigger uncontrollable inflation,[6] and David Hume noted that increases to the money supply would raise the price of labour as early as 1752,[7] the classic statement regarding the natural rate appeared in Milton Friedman's 1968 Presidential Address to the American Economic Association:[8] However, this remained a vision – Friedman never wrote down a model with all of these properties.
According to Friedman and Phelps, the Phillips curve was therefore vertical in the long run, and expansive demand policies would only be a cause of inflation, not a cause of permanently lower unemployment.
Edmund Phelps focused more in detail on the labor market structures and frictions that would cause aggregate demand changes to feed into inflation, and for sluggish expectations, into the determination of the unemployment rate.
Others have argued that there might be multiple equilibria, for example due to search externalities as in the Diamond coconut model or that there might exist a natural range of unemployment levels rather than a unique equilibrium.