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This paper estimates the range of equilibrium rates of unemployment for Australia. The estimation technique nests a unique equilibrium rate of unemployment as a special case. It is found for the period 1965^97 that a range of equilibria of at least 6.6 percentage points of unemployment exists in Australia. The lower limit of this range, which is the minimum rate of unemployment consistent with non-increasing in£ation, was 2^3 per cent in the 1960s, jumped in the early 1970s and was about 5.6 per cent during the 1990s. I IntroductionA number of papers have argued that a range of equilibrium rates of unemployment is more realistic than a unique equilibrium (or natural) rate of unemployment. For example, McDonald (1995) reviews evidence covering a number of countries and time periods, including, most dramatically, the interwar years. More recently Crosby and Olekalns (1998, p. 124) conclude that their estimates of the in£ation process in Australia are consistent with the idea of a range of equilibria.With a range of equilibrium rates of unemployment, a region of low rates of unemployment in which in£ation tends to be increasing is separated from a region of high rates of unemployment in which in£ation tends to be decreasing by a region of intermediate rates of unemployment in which in£ation tends to stay constant. 1 In this paper, the region of low rates of unemployment below the range is called the peak, referring to the peak of the business cycle, and the region above the range is called the trough. However, even although empirical evidence for the existence of the range has been put forward, no formal estimation of the size of the range has yet appeared in the literature. This paper attempts to provide such an estimate for Australia. The estimation technique nests the unique equilibrium as a special case. It is found that, for Australia for the period 1965^97, a range of at least 6.6 percentage points of unemployment exists. The lower limit of this range, which is the minimum rate of unemployment consistent with nonincreasing in£ation, was 2^3 per cent in the 1960s, jumped in the early 1970s and was about 5.6 per cent during the last three years of the period of estimation, i.e. during 1995^97. During the entire estimation period, 1965^97, the actual rate of unemployment was never above the range, i.e. the Australian economy was never in the trough. Wells and two referees for comments on earlier drafts. 1 The constancy of the rate of in£ation in the range is at a given rate of unemployment. Other in£uences, such as changes in the rate of unemployment, can have one-o¡ e¡ects on the rate of in£ation.

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The good health of an individual is a combination of uncontrollable factors that includes genetics and random events and controllable factors through the regulation of activities such as smoking and drinking. Since the work of Grossman in the 1970s, a significant relationship between health and earnings has been predicted. In this present paper the 1995 Australian National Health Survey is used to examine simultaneously the effects of drinking and smoking on wages. To model the interaction of smoking with alcohol consumption separate models are fitted for smokers and nonsmokers. These models account for potential selectivity bias resulting from the decision to smoke, and endogeneity arising from a potential causal relationship between earnings and alcohol consumption.

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