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The relation between unemployment and the rate of change of money wage rates in the United Kingdom
... The Phillips curve shows the inverse relationship between Inflation and unemployment. Phillips (1958a) showed that wages have an inverse relationship with unemployment. There is a negative correlation between inflation and unemployment (Samuelson & Solow, 1960). ...
... If the unemployment level decreases by 1%, it results in a 5% increase in the inflation level when there is low unemployment, indicating a situation where the demand for labor surpasses its supply. During a competitive labor market, companies may increase wages to attract workers, leading to wage inflation, as described by Phillips (1958a). The price equation depends on the wage rate, import prices, average labor productivity, and the number of lags of Inflation and explanatory variables. ...
... Increased resource investment leads to higher investment spending in the Economy, which is crucial in fostering growth and favorably impacting output growth. Higher output results in higher inflation rates, raising inflation uncertainty (Phillips, 1958a). An increase in import prices has a substantial and favorable impact on inflation growth, indicating that a rise in import prices leads to a rise in inflation levels. ...
Making a better estimate of Inflation can enable us to make a better guesstimate about its economic repercussions. In modern monetary economics, the standard Phillips Curve model (PCM), the New Keynesian Phillips curve model (NPCM), and the incomplete competition model (ICM) are the alternative econometric models specified to forecast Inflation. The present study intends to identify the appropriate inflation model based on its forecasting performance with its different specifications for Pakistan's Economy. PCM includes the output gap and unemployment rate, NPCM has forward-looking expectations and uses labor income share instead of the output gap, and ICM identifies the importance of incomplete information on labor and product markets and uses some error correction term (ECT) to forecast Inflation. The relevant ECT has overcome the omitted variable bias. ICM is better in visualization forecasting and has lower root mean square error and mean absolute percentage error than other inflation models. In conclusion, the wage-price dynamics model (ICM) offers the best prospect of a successful inflation forecast in the case of Pakistan.
... In searching for the relationship between unemployment and the rate of change of money wages Phillips (1958) found an inverse relationship between rate of change in wage inflation and unemployment. Later supported by Lipsey (1960) to prove that the theory indeed has merit and can be supported by empirical data and can be proven that there is a causal relationship between wage inflation and unemployment. ...
... Inflation targeting countries have suffered criticism over their persistent and often unrelenting preference to place inflation above growth (Vermeulen, 2017). South Africa's model of inflation and unemployment since its democracy has been observed as being different to the Phillips curve as it was first introduced by (Phillips, 1958). Unemployment in South Africa in the first quarter of 2019 was recorded as approaching 30% as compared to GDP growth of the same period which was between 0% to -2% ( ...
... The data from SARB will be secondary as it is not originally calculated by the researcher; however, it will be further scrutinized to produce results matching with the original Phillips curve theory. In this research we will sample SARB data from 2016 to 2023 to generate two models that should be able to provide us with an additional model that looks like the original Phillips curve as first constructed by Phillips (1958). ...
South Africa’s monetary policy has failed to make a connection to the
relationship between rising unemployment and the country’s inflation. Many research papers have yet to identify where the areas of concern
are regarding challenges facing unemployment in the country; with research focusing mainly on whether macro-economic principles are applied the same as those of developed countries. This paper is aimed at
researching the relationships over a specific period and to project a
model that is aimed at explaining the relationships that explains unemployment
... The concept of the Phillips Curve historically dates back to the 1950s in the economics literature. In the study titled "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957" (Phillips, 1958) by Phillips, the connection between unemployment rates and nominal wage rates in the UK was examined through empirical findings. As the name of the study suggests, Phillips analysed whether the rate of change in unemployment statistically affects the change in nominal wages, taking the UK data from 1861-1957 as a reference. ...
... According to the analysis findings, the increase in the unemployment rate decreases the nominal wage change rate. In other words, a negative correlation was found among the two variables in the study (Phillips, 1958). The negative slope curve obtained by transferring the negative correlation between the unemployment rate and the percentage changes in the nominal wage to the coordinate plane is called the Original Phillips Curve in the literature (Motyovszki, 2013). ...
... It is a fact that many studies have been done for many years on the original Phillips Curve (Phillips, 1958), which deals with the nominal wage increase rate-unemployment relationship and its modified version of the unemployment-inflation relationship in the literature. It has been revealed that in some of these, the Phillips Curve is valid; in others, it is not (Akiş, 2022). ...
The Federal Republic of Germany has been one of the historically remarkable countries socially and economically. In this context, one of the outstanding issues is undoubtedly the correlation between unemployment and inflation, which is at the intersection of economy and social policy. Therefore, in the study, the unemployment-inflation trade-off in Germany was examined with the help of macroeconomic data in the context of the Modified/Original Phillips Curve, which explores the unemployment-inflation relationship. The empirical study method is time series analysis, and the monthly data set covers the period from January 1992 to April 2023. According to the study's findings, no causality relationship could be detected between unemployment and inflation variables in Germany in the period, neither in the long run nor in the short run. Therefore, it shows that the German economy does not have to put up with the inflation problem in the fight against unemployment and the unemployment problem in the battle against inflation. In this respect, it would be beneficial to thoroughly examine the German labour market structure and monetary policy strategy in the literature.
... The paper presents a range of scholarly historical arguments and theoretical viewpoints, along with empirical evidence, to enhance the knowledge of the variables of inflation and unemployment and their relationship in South Africa. Phillips's (1958) original paper conducted an empirical study on the correlation between money wage, inflation, and unemployment. Phillips's groundbreaking research examines two components that were incorporated into the literature review approach, specifically connecting this research to the context of South Africa. ...
... The relationship spells that the inflation rate will be stable if the actual GDP equates to the potential GDP (Mashele, 2018). Phillips (1958), the British economist, related the wages growth to the unemployment rate and submitted that when labour is underutilized, there are fewer wage increases (Montoriol, 2015). ...
The paper investigates the relationship between inflation and unemployment in the South African setting, encompassing a comprehensive analysis of historical, theoretical, and empirical evidence. Existing literature surveys demonstrate that several studies have been conducted in multiple countries to ascertain the correlation between inflation and unemployment. The review incorporated the postulations of many economic schools of thought as they are applied to South Africa. The Phillips Curve was examined in accordance with the research purpose. The process involves gathering secondary data from reputable sources such as Statistics South Africa, the South African Reserve Bank, and other reliable secondary sources to analyse this relationship. The findings are presented using linear regression, tables, and figures. The study utilised annual inflation and unemployment data in South Africa spanning from 2000 to 2022 to elucidate the correlation between inflation and unemployment. The study discovered that the link was nonlinear and did not exhibit any meaningful association or correlation.
... The paper presents a range of scholarly historical arguments and theoretical viewpoints, along with empirical evidence, to enhance the knowledge of the variables of inflation and unemployment and their relationship in South Africa. Phillips's (1958) original paper conducted an empirical study on the correlation between money wage, inflation, and unemployment. Phillips's groundbreaking research examines two components that were incorporated into the literature review approach, specifically connecting this research to the context of South Africa. ...
... The relationship spells that the inflation rate will be stable if the actual GDP equates to the potential GDP (Mashele, 2018). Phillips (1958), the British economist, related the wages growth to the unemployment rate and submitted that when labour is underutilized, there are fewer wage increases (Montoriol, 2015). ...
A B S T R A C TThe paper investigates the relationship between inflation and unemployment in the South African setting, encompassing a comprehensive analysis of historical, theoretical, and empirical evidence. Existing literature surveys demonstrate that several studies have been conducted in multiple countries to ascertain the correlation between inflation and unemployment. The review incorporated the postulations of many economic schools of thought as they are applied to South Africa. The Phillips Curve was examined in accordance with the research purpose. The process involves gathering secondary data from reputable sources such as Statistics South Africa, the South African Reserve Bank, and other reliable secondary sources to analyse this relationship. The findings are presented using linear regression, tables, and figures. The study utilised annual inflation and unemployment data in South Africa spanning from 2000 to 2022 to elucidate the correlation between inflation and unemployment. The study discovered that the linkwas nonlinear and did not exhibit any meaningful association or correlation.
... The PBC model was associated with the Phillips curve at the moment a "myth of the Phillips curve" started to take form. Forder (2014b) summarizes this "myth": first A. W. Phillips (1958) detailed an inverse relationship between unemployment and inflation; then Samuelson and Solow (1960) advocated that the Phillips curve should be an instrument of policy, that governments could accept slightly higher levels of inflation to boost unemployment; then Phelps (1967) and Friedman (1968) criticized the idea that governments have a "menu of policies" and, upon proposing the expectationsaugmented curve, claimed that the idea of a menu gave leeway for inflationary policies that would eventually make the economy collapse; for this reason, money supply should be controlled. ...
... As Forder (2014b) showed, however, it does not survive scrutiny. Phillips (1958) was criticized and eventually disowned by its author. Samuelson and Solow (1960) intended to study approaches on how to understand inflation and did not have any intention of providing policy recommendation. ...
Research in political business cycles (PBCs) are part of a larger program related to the economic analysis of politics with a macroeconomic focus called New Political Macroeconomics. This article explores the historical evolution of the literature in political business cycles, starting with its first writers. The article emphasizes William Nordhaus's contribution. Nordhaus transformed a problem that was seen as a microeconomic issue into a macroeconomic one. The model has come under criticism because of its hypotheses on voters, lack of empirical verification and lack of conforming with rational expectations theory, which made interest in PBCs diminish. The formalization of conditional PBCs "solved" the problem of empirical verification. These models predicted that PBCs need specific conditions to happen. The article concludes that PBCs have the capacity of reinventing themselves and analyze, with macroeconomic tools, issues of collective decision-making, a domain previously thought to be only microeconomic.
... Consideration is given to the theoretical and empirical relationship linking wages to unemployment to model wages. Based on the Phillips (1958) curve and the wage-setting (WS) curve, many studies have tried to determine how unemployment affects wages (e.g., Blanchflower and Oswald (1995) and Blanchard and Katz (1999)). Although both the Phillips and WS curves link unemployment rate and wages, they are different for two main reasons. ...
... The paper follows Blanchard and Katz (1997) in constructing the variable P, by regressing labor productivity on a quadratic linear trend and using the predicted values. 26 The Phillips curve (Phillips, 1958) links unemployment not to the wage level but to the change in wages, as in Eq. 2. The choice between the WS model or the Phillips model will be discussed in Sect. 4.4. ...
This paper documents the effect on wages of one of the most far-reaching French economic reforms of the past decade. The reform, implemented between 2013 and 2018, provided a corporate tax credit proportional to the payroll for those employees paid no more than 2.5 times the French minimum legal wage. The aim of the reform was to increase competitiveness and employment by reducing labor costs through a corporate tax credit. It is shown here that a significant part of the tax credit paid to firms actually increased wages, missing the reform’s initial target. Insofar as almost all companies were affected by the reform, an innovative evaluation method is used here to simulate a counterfactual scenario for wages using branch data from France’s national accounts. This method successfully estimates the specific impact of the reform on wages and it is robust to several checks, such as placebo estimates. The present contribution to the literature is threefold. First, we propose a novel methodology of policy evaluation specially designed for the absence of a counterfactual. Second, and unlike most public policy evaluation studies, national accounts data are used instead of firm-data. Third, the partial equilibrium results presented in the article are particularly relevant for calibrating a macroeconomic model accounting for general equilibrium effects. Indeed, the reform amounted to a cut in corporate taxes equivalent to 1% of GDP, therefore constituting a sizable macroeconomic shock.
... Mankiw (2001) Similarly, Phillips (1958) invented the PC idea in 1958. The curve depicts a trade-off between an economy's unemployment rate and its pricing level. ...
... As a result, the common argument is that reduced unemployment may exist only at the price of higher inflation, or vice versa. However, Phillips (1958) and Friedman (1977) contended that the government cannot continuously trade reduced UR for greater inflation. The notion of the PC is important because it aids in the conception of the link between the unemploymentand the inflation rate. ...
This study examines the effect of inflation and military expenditure on unemployment in the case of Pakistan. This study used the data set from 1972-2021 and, based on the behavior of the data, employed the ARDL procedure for assessment. This study found that FDI, GDP, inflation, military expenditure, gross capital formation, and human capital have adverse and noteworthy effects on unemployment over a long period. However, the FDI, GDP, military expenditure, gross capital formation, and human capital have an inconsequential impact on the unemployment rate. However, inflation has an adverse and noteworthy effect on unemployment in a short period. Furthermore, there exists a bi-directional causality between military expenditure and unemployment, while there exists no causality between inflation and unemployment, and military expenditure and inflation. This study concluded that the rise in military expenditure and inflation inversely influence unemployment in Pakistan. This study supported the Philips theory in Pakistan that inflation and unemployment have an adverse link. Based on these findings, this study recommended that the government increase military expenditure to maintain peace in Pakistan and minimize inflation and unemployment.
... According to the author, 9. As is known, the origin of the Philips curve is his paper The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1957(Phillips, 1958. Even though evidence can be found in the literature of some passages where earlier authors have identified some inverse relationship between unemployment and inflation, possibly, according to Humphrey (1985), going back to John Law (1621-1729), it is generally accepted (Gordon, 2011) that the link between unemployment and inflation was formally established by Phillips' estimated regression, represented by: (Phillips, 1958, p. 290), in which is the annual rate of change of nominal wages in a percentage and U the unemployment rate. ...
O uso de evidências como subsídio à atuação governamental não é tema novo no debate sobre a produção e legitimação da ação do Estado. Nas últimas décadas, no entanto, o movimento das políticas públicas baseadas em evidências (PPBEs) tem intensificado a defesa de que mais e melhores evidências sejam produzidas como instrumentos capazes de orientar a produção de políticas públicas. Esta publicação almejou ilustrar essa multiplicidade de recursos para produção de inferências com contribuições que mobilizam tanto estudos qualitativos como quantitativos ou mistos, além de experimentais. Ao longo da publicação, cada capítulo adota métodos distintos, como é de se esperar a partir dos variados objetos de análise.
... A.W. Phillips published 1958 a well-known paper, (Phillips, 1958), which showed that inflation and unemployment are roughly inversely proportional. This result is called the 'Phillips curve', see Fig. 6.3, which is our own drawing. ...
... We assert that the condition of the economywhether weak or strongwill affect applicants' views on job offer attractiveness. The Phillips curve (Phillips, 1958) reveals that key drivers associated with the economy -unemployment rates and inflation rateshave an inverse relationship with wage growth. Although there have been scholars who have investigated whether the Phillips curve is flattening, the inverse relationship remains (Hooper et al., 2020). ...
We examine the influence of two factors beyond pay on applicants’ job offer evaluations in the IT and hospitality industries – whether an offer’s expected work hours influence attraction and whether job applicants’ perceptions of the economy influence attraction. Using a policy-capturing approach and a sample of 49 university students (882 total observations), we hypothesized that (a) the number of hours also matters when evaluating a job offer and (b) the economy moderates the relationships between hours worked and offer attractiveness and pay and offer attractiveness such that job offers would be more attractive under a weak economy than under a strong economy. Our findings suggest that the amount of work matters to applicants and that more research is needed to understand how macro factors like the economy impact important work evaluations.
... Remittances can impact government expenditure through several channels. On the one hand, increased remittance inflows may lead to higher consumption and investment, stimulating economic growth and potentially increasing government revenue through indirect taxes (Phillips, 1958). On the other hand, remittances might reduce the pressure on the government to provide social services, leading to lower expenditure in these areas (Yang, 2008). ...
This study examines the impact of inflation rate, remittance income, and public borrowing on the government's annual expenditure. This study is based on the descriptive and exploratory research design. It follows the positivist research philosophy and quantitative characteristics. It uses secondary data collected from various economic surveys in Nepal and reports from the World Bank. It covers 33 data points from 1990 to 2022. Simple statistical and econometric tools like descriptive statistics, robust regression analysis, Normality test, and confidence interval test are used in this study. The inflation rate, public borrowing, and remittance income are responsible for increasing Nepal's government expenditure. The inflation rate is not individually significant in determining the spending in Nepal. Remittance income has a considerable positive impact on total expenditure in Nepal. One unit increase in remittance income results in a 0.109648 unit increase in government expenditure in Nepal. Likewise, public borrowing is highly significant in explaining government expenditure. One unit increase in public borrowing results in a 1.145037 unit increase in government expenditure in Nepal. Nearly 73.69 percent variation in total government expenditure depends on Nepal's inflation rate, remittance income, and public borrowing. Policymakers in Nepal should focus on bolstering remittance inflows and implementing prudent public borrowing management strategies to foster sustainable economic growth while recognizing the limited influence of the inflation rate on government expenditure.
... This concept links inflation and unemployment. Phillips (1958) was the first to find a stable pattern in US and UK labour markets between wage inflation and unemployment rates. Samuelson and Solow (1960) observed high inflation in times of low unemployment and vice versa. ...
The concept of full employment is associated with diverse economic, political and social aspects. We provide a survey of theory, empirics and policy issues related to full employment. We make a novel contribution by tying together multi-dimensional aspects of full employment regarding definitions, theoretical perspectives, empirical measurements, policy debates and real-world policy programs. We distinguish: concepts of full employment that provide systematic links to price stability; minimum unemployment and maximum employment approaches; and the unfilled vacancies perspective. Furthermore, we provide and discuss different empirical measures of full employment for selected economies, and we propose a new full employment typology. Based on our survey findings, we argue that conceptualising and measuring full employment is not merely a technical task, but inevitably involves normative judgments. Finally, we discuss avenues for future research.
... Кривая Филлипса первоначально отражала связь между уровнем безработицы и темпом роста заработной платы (Phillips, 1958). В дальнейших исследованиях безработицу в качестве меры экономической активности заменил разрыв выпуска, а темп роста заработной платы -темп инфляции. ...
В работе проверяется гипотеза о наличии пространственных эффектов для квартальных индексов потребительских цен (ИПЦ) в российских регионах за 2015–2021 гг. Для моделирования пространственной зависимости гибридной кривой Филлипса использовались матрицы расстояний, соседства и миграции. Выявлена пространственная нестационарность модели для всей территории страны, поэтому оценивание проводилось отдельно для западных и восточных регионов. Тестирование на панельных данных показало незначимость пространственного лага зависимой переменной, что подвергает сомнению предположение о «мгновенном» (в течение того же периода) переносе инфляции. Вероятно, ключевым здесь является фактор частотности данных: квартальные или месячные уровни инфляции лучше подходят для пространственного анализа, чем годовые (для которых пространственный лаг будет значимым). Оценивание дарбиновской модели с ошибкой (SDEM) показало, что инфляционные ожидания в соседних регионах отрицательно влияют на инфляцию в регионе в данном периоде. Оценки вклада прямых эффектов для π(t – 1), π(t + 1) и косвенного эффекта для π(t – 1) имеют ожидаемые положительные знаки. Сумма оценок коэффициентов при лагах инфляции в пространственной гибридной кривой Филлипса близка к единице. Применение матрицы миграции для западных регионов оказалось неудачным, возможно из-за значительных искажений, вносимых Москвой и Московской областью в межрегиональные взаимодействия.
The paper tests the hypothesis of the presence of spatial effects for quarterly CPI in the Russian regions over the period 2015–2021. Contiguity, distance and migration matrices were used for spatial Phillips curve modelling. Due to spatial non-stationarity of the model for the whole Russia, the model was used for estimations separately for western and eastern regions. Panel data testing showed insignifi cance of the spatial lag of the dependent variable, which casts doubt on the hypothesis of “instant” (within the same period) infl ation spillover. Perhaps the key factor here is the frequency of time series data: quarterly or monthly CPI better suit for spatial analysis than annual ones (for which the spatial lag will be signifi cant). Spatial Durbin error model (SDEM) estimation showed that the infl ation expectations in neighboring regions negatively impact on infl ation in the region in this period. The estimations of the direct effects contribution for π(t − 1), π(t + 1) and indirect effect contribution for (t − 1) expectedly have positive signs. The sum of estimated coeffi cients for infl ation lags in spatial hybrid Phillips curve is close to 1. The use of a migration matrix for the western regions was unsuccessful, perhaps due to strong distortions introduced by Moscow and the Moscow region into interregional interactions.
... An influential paper published in 1960 by Paul Samuelson and Robert Solow (1960) argued that work by A.W. Phillips (1958), which became known as the Phillips curve, suggested that there was a long-run tradeoff between unemployment and inflation and that this tradeoff could be exploited. Under this view, the policymaker would have to choose between two competing goals--inflation and unemployment--and decide how high an inflation rate he or she would be willing to accept to attain a lower unemployment rate. ...
The world economy has experienced the largest financial crisis in generations, a global pandemic, and a resurgence in inflation during the first quarter of the 21st century, yielding important insights for central banking. Price stability has important benefits and is the responsibility of a central bank. Achieving price stability in a complex and uncertain environment involves a credible commitment to a nominal anchor with a strong response to inflation and pre-emptive leaning against an overheating economy. Associated challenges imply that central bank communication and transparency are key elements of monetary policy strategies and tactics. Crises have emphasized the role of central banks in promoting financial stability, as financial stability is key to achieving price and economic stability, but this role increases risks to independence. Goals for central banks other than price and economic stability, complemented by financial stability, can make it more difficult for them to stabilize both inflation and economic activity.
... In addition, in low inflation contexts, the connection between the activity level, money and prices is not so clear. Based on the criticism of the "Phillips Curve" (Phillips, 1958) Friedman (1968 and Phelps (1967) suggested the hypothesis that in the long run unemployment is at its "natural rate", revealing the "monetary" character of inflation. The Friedman and Phelps hypothesis assumes that deviations from the natural rate generate changes in the inflation rate, something that does not seem to be particularly observed when inflation is above the natural rate (Akerlof et al., 2000) 6 . ...
This paper analyzes the empirical relationship between the inflation rate and its proximate determinants in Argentina, using quarterly data over the period 2004-2022 and an error-correction vector model approach. Unlike previous literature, this paper uses a theoretical framework to motivate the inclusion of variables that are expected to contribute to explain inflation, thus reducing the risk of omitting relevant variables and formalizing key mechanisms. Inference is performed through Granger causality analysis, impulse response functions and forecast errors variance decomposition. The results suggest that an anti-inflationary plan for Argentina should take into consideration both the greater relevance of the inertial component, the exchange rate and the interest rate in the short-run dynamics of the price level, and the long-run relationship between prices, interest rate and activity level.
... reduce the inflation impact of a nominal interest rate shock." (Walsh C. 2005, p. 848) 3. Inflation Phillips A. (1958) fitted an empirical curve to a statistical scatter diagram of British time series data for annual percentage rates of change of money wages and unemployment as a proportion of the labor force over the years 1861-1957. The resulting curve showed an inverse relationship between unemployment and inflation. ...
The objective of this dissertation is to determine the effect of expected demand on aggregate employment in the United States (U.S.) for the period 1948 Q1 to 2023 Q3. The relationship is studied using both qualitative and quantitative analysis.
My work is primarily based on expectations theory and on Keynesian economic theory, carefully considering the work of Lucas, Muth, and Sargent on expectations theory; and the work of Keynes on unemployment and effective demand. My model results indicate that economic expectations have a significant effect on aggregate employment.
The Research Problem is “What are the determinants of changes in aggregate employment in the United States of America (U.S.)?” This is an important research topic because significant increases in unemployment can have profound effects on an entire society, not just on its unemployed workers. When unemployment increases significantly, public health declines, crime increases, suicides increase, and public revenues decrease. Government is then placed in the unenviable position of facing increased demand for public services at the very time that public revenue is declining.
The Research Hypothesis is “Firms increase and decrease employment in response to changes in expected demand.” Two proxies for expected demand are used in the dissertation: nonresidential fixed investment, and personal consumption expenditures.
The literature review was used to identify specific variables that some labor economists believe have a significant impact on employment. The literature review identifies two major research gaps in the study of aggregate employment in the U.S. These gaps are a shortage of papers on the effect of expected demand on aggregate employment; and that papers on expected demand and aggregate employment have not been updated to account for the economic effects of Covid-19, which began in the autumn of 2019.
The author addresses these research gaps by submitting a dissertation on expected demand and aggregate employment; and by including data for the period 1948 Q1 to 2023 Q3, thereby accounting for the economic effect of the Covid-19 pandemic.
As a result of the Covid lockdowns, civilian employment declined by twenty-two million jobs from February 2020 to April 2020. The U.S. government then spent approximately $5 trillion dollars to provide relief to businesses, individuals, and local government. As a result of the relief programs, total employment rose from 130.4 million in April 2020 to 156.9 million in December 2023.
The relief programs increased disposable income thereby increasing personal
consumption. In so doing, government changed expectations as measured by personal consumption expenditures and nonresidential fixed investment. The increase in personal consumption raised business expectations and resulted in increases in nonresidential fixed investment, which increased employment.
The empirical results confirm my hypothesis. A total of sixteen models are presented in this dissertation. Every one of these models indicate that the two expected demand proxies have a significant effect on employment at below the 0.05 level.
The short-run models used included OLS, WLS, and ARCH-family models. A Fractionally Integrated GARCH (FIGARCH) model was used to estimate the long-run effects. The FIGARCH model estimated that the two expected demand proxies accounted for over 41% of the average change in employment over the course of this study.
... Equally important in this study is its discussion of the Phillips curve relationship between employment and the rate of wage (or price) change. This discussion originated with Phillips (1958), who focused on the tradeoff between unemployment and wage changes. He showed the persistence of a nonlinear tradeoff in the United Kingdom for a century. ...
This paper uses Taylor's macroeconomic model with rational agents. The model is designed to allow the researcher to estimate aggregate demand and price equations under rational expectations and some inflexibility in wage adjustment arising from contracts. The generalized method ofmoments is applied to estimate the model for the Brazilian and U.S. economies in the period 1973-85. Government monetary policy functions based on losses arising from inflation and unemployment are then used to construct a second-order Phillips curve, which shows the different variances of inflation and unemployment that are optimal depending on loss function weights. The main conclusions are that there is a tradeoff between the variabilities of inflation and output in both economies, and that monetary policies were not optimal in either economy during the period.
... El primer modelo inflacionario adoptado ampliamente por la comunidad académica es el modelo presentado por (Phillips, 1958). En este la inflación π t depende negativamente de la tasa de desempleo u t de la forma: ...
Maintaining low, non-negative and stable inflation levels is a necessary condition for the stability of the economy as a whole, because the monetary authorities of most industrialized countries, including the Central Bank of Costa Rica since 2005, they have oriented their monetary policy precisely to that task. Still Thus, both in Costa Rica and internationally, most of the statistical modeling of inflation has been limited to modeling their expectancy conditional on different covariates using linear models. This implies a lack of knowledge of the dynamics of the extreme values of the inflation rate and how these are related with other macroeconomic variables. In Costa Rica this is of particular importance since in several periods Negative quarter-on-quarter inflation rates have recently been experienced, which can be problematic if this becomes a recurring phenomenon. Therefore, in this work we propose to answer what is the relationship between the gap of GDP, inflation expectations, imported inflation rate, and the extreme values of the inflation rate in Costa Rica. That is, the main objective is to determine the relationship between the extreme values of the the inflation rate, GDP gap, inflation expectations and imported inflation.
... In the second step, we analyze the nominal wage growth of permanent workers only, and we finally implement our main dependent variable, which is nominal wage growth net of composition effects _ W i, t . While most studies estimating wage Phillips curves use quarterly data, 5 we have to stick to an annual frequency (as in the original contribution by Phillips 1958 or more recently by Kiss and Van Herck 2019) as the computation of our dependent variable is feasible based only on yearly data. Our sample includes 30 European countries (i) and ranges from t = 2004,. . ...
As temporary employment has become a pervasive feature of modern labor markets, reasons for wage growth have become less well understood. To determine whether these two phenomena are related, the authors investigate whether the dualized structure of labor markets affects macroeconomic developments. Specifically, they incorporate involuntary temporary workers into the standard wage Phillips curve to examine wage growth in 30 European countries for the period 2004–2017. Relying on individual-level data to adjust for a changing employment composition, their findings show, for the first time, that the incidence of involuntary temporary workers has strong negative effects on permanent workers’ wage growth, thereby dampening aggregate wage growth. This effect, which the authors name the competition effect, is particularly pronounced in countries where wage bargaining institutions are weak. The findings shed further light on the reasons for the secular slowdown of wage growth after the global financial crisis.
... However, for the same level of workers' bargaining power, you may have different rates of change in money wages insofar as the real wage targeted by the workers remains different from the actual one. 10 In the period 1950-1977, except in the United States (where the wage rate growth was more similar to its secular trend), the real wage annual percentage increase was greater than in any previous historical phase after the first industrial revolution (see, for instance, Hansen, 1925;Phelps Brown, 1968;Scholliers, 1989) -and, a fortiori, greater than in any previous historical period. The situation changed starting in the years 1977-1979, irrespective of the wage rate considered (contractual wages, earnings, or labour compensation), and irrespective of the deflator used (the cost of living index, or the GDP price deflator). ...
... The theoretical evaluation of GDP responses initiates with a production function linking output to inputs like labor. In this context, a surge in oil prices elevates the total price level, influencing unemployment according to the "Keynesian" Phillips curve [Phillips (1958)]. Based on Keynesian assumptions of rigid wages, employees consider nominal wages, leading to increased inflation but also revitalizing activity by stimulating consumption and effective demand. ...
... A equação 21 representa a curva de Phillips, que, embora não se enquadre na versão mais difundida dessa curva, também fornece explicações sobre como diferentes níveis de desemprego podem estar relacionados a diferentes níveis salariais, assim como em sua versão original proposta por Phillips (1958). De acordo com esta abordagem, a aproximação do pleno emprego elevaria o poder de barganha dos trabalhadores (µ 1 ), pressionando a inflação salarial (∆W t ). ...
This study begins by addressing the instability of the capitalist system to examine ways of achieving full employment in terms of distributive conflict viability. Drawing on the theoretical frameworks of Minsky and Kalecki, the focus is on Minsky's proposal of a Job Guarantee Program as the subject of study and the guiding thread throughout three chapters, along with the introduction and conclusion. Each chapter employs different methodologies to investigate how to mitigate escalating conflict at full employment and make it less unstable.
The chapter that follows the introduction is dedicated to studying the risk of the Job Guarantee Program triggering an inflationary spiral through distributive conflict. In this analysis, we draw upon segmented labor market literature to investigate the transmission mechanisms that lead from full employment to inflation. On the one hand, we separate the labor demand by firms in the primary market from those in the secondary market. On the other hand, we differentiate high- and low-skilled labor supply. Based on this segmentation, we identify that the transmission channel from full employment to inflation will be more constrained if the Job Guarantee Program can concentrate labor demand on candidates in the secondary market and low-skilled workers. Thus, by applying this observation to an established inflationary spiral model from the literature, we highlight the potential of the Job Guarantee Program to restrict the mentioned transmission channel.
The third chapter adopts a Stock-Flow Consistent approach to simulate different scenarios of full employment in a peripheral economy. In addition to a conflict-claims inflation model, we incorporate equations that help us understand the impact of the external sector and various institutional agents such as households, firms, banks, the Central Bank, government, and the rest of the world. The simulations compare the same economy being driven to full employment under two different scenarios: traditional demand spurs and the Job Guarantee Program (JG). Based on the parameters used in the simulations, due to the fact that all the fiscal stimulus of a JG goes straight to the labor demand, this Program is capable of employing the entire labor force with less demand effort compared to traditional spurs. As a result, the lower fiscal stimulus leads to lower income growth that attenuates the impact on the balance of payments, exchange rates, inflation, and distributive conflict. The model suggests a trade-off between growth and balance of payment constraints that peripherical countries have to deal with. However, it is also shown that the JG program deals better with this trade-off regarding distributive conflict and external sector constraints under the full employment situation. Therefore, we also evaluate the effects of reducing the degree of financial openness and find results that emphasize the crucial importance of an international capital control policy as a necessary condition for maintaining full employment in these economies within the International Monetary System's periphery.
Finally, in the fourth chapter, we address the political aspects of full employment and examine an economic plan from post-World War II Sweden as a significant laboratory from which institutional lessons can be drawn to consider full employment in the present. At this stage of the thesis, the focus is on the Job Guarantee Program as a "path to full employment," which can partially address the Kaleckian dilemma. This dilemma, considered a paradox in Kalecki's thinking, highlights the political difficulties of implementing and maintaining full employment despite acknowledging no technical barriers to achieving it. In this regard, the chapter provides a review of the main Swedish institutions identified in the studied economic plan and lists which ones could be replicated by the institutions advocated in the current literature on the Job Guarantee Program. Based on this review, we suggest three new institutions to be implemented alongside the Program to reproduce some of the results of the Swedish plan: 1) Wage cooperation policy, 2) taxation on extraordinary profits, and 3) control of capital flow.
In conclusion, this thesis demonstrates that achieving full employment in a peripheral economy is not a trivial task and depends on the adoption of a series of prudent measures outlined throughout the work. The primary contribution lies in the mapping of potential areas of attention to enable economic policy to achieve and maintain full employment in a perihepral economy.
... The relationship between unemployment and inflation was popularised by Phillips (1958), who argued that there is a negative relationship between the series, and an implication of that work is that expansionary monetary policy might lead to more inflation but less unemployment. Following his work, much additional research has been done on the interrelationship between these two economic variables (Santomero & Seater, 1978). ...
This paper focuses on the analysis of persistence in the unemployment and inflation rates in a group of 38 OECD countries as well as on the relationship between the two variables. For this purpose, fractional integration is used. The results indicate that the two individual variables are highly persistent, especially the unemployment rate, and evidence of mean reversion is only found in the cases of Colombia and Costa Rica for unemployment and in Norway for inflation. Conducting the analysis on the difference between the two variables, the order of integration is significantly smaller in a number of cases, and reversion to the mean takes place in the cases of Austria, Switzerland, Costa Rica, Israel, and Turkey. Policy recommendations derived from the results are presented in the concluding section of the article.
... In it, we are interested in looking at the effect of the international oil price on the Ecuadorian unemployment rate through a controlled OLS model. To this end, we incorporated control variables widely used in the literature to explain unemployment, including the outdated unemployment rate itself, labor productivity, and the general price index, which, in our case, is composed of all those segments of products not dependent on oil (Phillips, 1958;Ramcharran, 2002;Salimova et al., 2022). 8 ...
Through an empirical analysis of the impact of variations in the international price of oil on the economic production of different strategic sectors and on energy production from various sources in Ecuador, the study seeks to show evidence on the economic effects of the price of oil. in a Latin American economy strongly linked to oil production. For this, relevant data were collected on production in different economic sectors, on the type of ownership in oil production and on energy production in various energy sources in Ecuador and statistical analyzes were carried out to evaluate the relationships between these and the international oil price. The results indicate that the effect of the oil price varies between the economic sectors of Ecuador. Some sectors, such as financial services and construction, show positive responses, while others, such as agriculture and fishing, appear less affected. The oil and mining sector in Ecuador is strongly linked to variations in the price of oil. The positive and significant response of the Oil and Mines GDP underlines the sensitivity of this sector to changes in international prices. Furthermore, energy production in Ecuador exhibits heterogeneous responses to variations in the price of oil. Forms of energy such as wind, solar, and thermal energy show positive and significant responses, while hydropower presents a negative response in some periods. Positive responses in forms of energy such as wind, solar, and thermal may indicate that the increase in the price of oil positively influences investment decisions in these energy sources. The study provides a significant contribution to the field of energy economics in oil-exporting countries and, particularly, in developing countries, as well as highlights the importance of energy diversification for these types of economies.
... The theoretical evaluation of GDP responses initiates with a production function linking output to inputs like labor. In this context, a surge in oil prices elevates the total price level, influencing unemployment according to the "Keynesian" Phillips curve [Phillips (1958)]. Based on Keynesian assumptions of rigid wages, employees consider nominal wages, leading to increased inflation but also revitalizing activity by stimulating consumption and effective demand. ...
... Phillips curve (Phillips, 1958). Based on Keynesian assumptions of rigid wages, employees consider nominal wages, leading to increased inflation but also revitalising activity by stimulating consumption and effective demand. ...
Revealing the precise thresholds at which fluctuations in oil prices start to affect gross domestic product and its various components (consumption, investment, expenditure and exports) holds significant implications for policymakers in both oil-importing and oil-exporting countries. Existing studies assessing the effects of oil prices on economic activity typically assume constant or stable threshold values. However, recent evidence suggests that this restrictive assumption may not accurately capture the dynamic nature of these relationships. We address this issue by adopting a more realistic framework that allows for the possibility that oil prices will have a time-varying effect on economic activity. We also employ the innovative time-varying threshold regression kink model of Yang and Su (2018). Our analysis focuses on a sample of 20 top oil-importing and oil-exporting countries during the period 1995Q1 to 2023Q2. The findings of our investigation provide compelling evidence to support the existence of time-varying threshold levels in the relationship between oil prices and macroeconomic activity for most countries in our sample. Notably, our research unveils a substantial heterogeneity in the oil price thresholds across the investigated countries, thereby challenging the notion of a universal threshold applicable to all.
... Phillips Curve was developed by [37], positing that when inflation rises at a high level, unemployment will slow down and it's vice versa. The Phillips curve equation can be derived from the (shortrun). ...
A well-developed financial system plays an important role in the economic performance of a country. Thus, the role of financial development and its functions in stimulating economic performance is concrete. However, the economy of Rwanda has experienced an accelerated inflation rate in recent times. The study adopted an ex post facto design to ascertain the effect of financial development on the inflation rate in Rwanda over a period of 12 years. Time series data were collected from 2011-2022. Ordinary Least Squares (OLS) were also adopted. The findings revealed that financial liberalization, domestic credit to the private sector, monetary policy rate, market capitalization, and all share indexes jointly did not influence the inflation rate in Rwanda (Adj.R2 = 14.39%, p = 0.3524 > 0.05, F-stat = 1.3699). The study concluded that financial development did not affect the inflation rate in Rwanda during the period under review. The study recommends that the government of Rwanda should improve on financial development through improving macroeconomic factors such as liberalization of the financial sector and strengthening the channels of credit to the private sector.
In this chapter we explore the connections between on the one hand causal relations and on the other hand strict and less strict laws, i.e., regularities, expressed as correlations and regressions.
It is tempting to think that laws and regularities describe general causal relations. They do not. Neither laws nor regularities distinguish between cause and effect, they state relations between quantities only; the causal aspect is connected to the manipulation and this aspect is not represented in formulations of laws and regularities.
Non-strict laws, often called ‘regularities’, differ from strict laws in that they are conditioned on ceteris paribus clauses, i.e., unspecified clauses of the form ‘all else the same’. This makes generalisations, i.e., inferences to unobserved situations, difficult.
The main points of this chapter are: Laws, strict and non-strict, express relations between quantities, not cause-effect relations.
Regularities are expressed by two measures, coefficient of correlation and regression.
Inferring causal relations from laws and regularities requires additional information.
Having such information one may represent causal relations using directed graphs and/or structural equations.
In recent years, the global economy has been hit by a sequence of severe shocks that affected the two largest economies, the USA and the Euro Area, severely. Uncertainties about the future abound. While the challenges are similar for both economies and the policy tools resemble each other, they apply to different economic landscapes. What can they learn from each other? This paper looks at the basic structural facts, the nature of uncertainty shocks, and the efficiency of policy tools in the two economies. The key to understanding recent developments is uncertainty. This paper argues that the channel through which uncertainty influences inflation, wage cost, and unemployment is the markup firms charge to cover their cost of capital. While the measurements of uncertainty are uncertain, adding a proxy for uncertainty can improve the estimates of the basic New Keynesian model. The Federal Reserve Bank has been more successful because it operates in a more integrated capital market. In the Euro Area, uncertainty is higher than in the US and this could make disinflation in Europe more painful in terms of unemployment.
The article explores the impact of unemployment in the United States on inflation and the industrial production index. This research is relevant in view of how the most economically developed country in the world overcomes the problems associated with the crisis (financial crisis, pandemic) of the last 20 years. The purpose of this article is to explain the relationship between macro indicators, which are mentioned above and to investigate the role of some nations in these indicators, namely: Latinos, African-Americans and Americans of Asian descent. Correlation analysis and forecast based on neural network were used to solve the target. The analysis was carried out using the Python programming language. All graphs, tables, and other visual elements were built with using the Matplotlib library, and the graphical display of correlation matrices was built in Seaborn. According to our research, the analysis showed that the unemployment rate has the greatest impact on the industrial production index, and the link between inflation and unemployment is quite specific and depends directly on the crisis. The hypothesis was expressed that there was no relationship between the unemployment rate and inflation in a stable period, a correlation analysis was made excluding the crisis of 2008 and the pandemic 2019 – 2021 years from the sample of data. The analysis showed a very small inverse relationship, which confirmed our hypothesis. Examining Phillips’ curve, the thesis was refuted that influencing inflation could control the unemployment rate. Conducting its own research, this article answers the question: «How does the unemployment rate affect inflation?» and this answer applies not only to the US economy, but also to any other country. In addition, the article made a forecast of unemployment in the United States until February 2022 with the help of a neural network built using the TensorFlow library. The correctness of the forecast data was checked by real data, and the error does not exceed 0.5%. The impact of unemployment on the industrial production index is most observed among Latinos. In majority cases, the areas in which Latin Americans worked suffered more than other ethnic groups. For other nations, the unemployment rate of Americans of Asian descent never exceeds the average level in the United States (only the pandemic period is an exception), and the unemployment rate of African Americans among all nations is the highest and gave way only to Hispanics at the peak of the pandemic. There was also a tendency that the unemployment rate always returns to its natural level, near 4-5%.
This paper addresses the challenge of estimating and forecasting conditional densities in high-dimensional time series data, particularly in economic and financial contexts. Traditional linear regression models often fall short in describing complex conditional distributions. To overcome these limitations, the paper introduces a robust method based on smoothed quantile regression, that avoids restrictive assumptions about the data generating process. Quantile regression offers a flexible framework that can capture skewed, heteroskedastic, multimodal, and heavy-tailed conditional distributions. The approach is demonstrated through a simulation study and applied to forecast the conditional density of inflation, considering variables such as GDP growth, industrial production growth, and the unemployment rate.
A growing body of scholarly research has explored the non-linearity of the Phillips curve, but empirical evidence from an African perspective, particularly within the ECOWAS sub-regional context, remains underexplored. This study aims to address this gap by offering a fresh perspective on the asymmetric Phillips curve for West African countries through a comparative country-specific analysis and a panel framework utilizing the nonlinear autoregressive distributed lag (NARDL) model for the period 1986–2020. The empirical outcomes demonstrate that the asymmetric response of inflation to both positive and negative unemployment differs across the countries of Benin, Burkina Faso, Ghana, Guinea, Cote d’Ivoire, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo. Specifically, the study finds that inflation declines when unemployment rises and surges when unemployment declines in both short- and long-term dynamics. These findings highlight that low unemployment during economic expansion leads to wage-price spirals, while high unemployment results in low inflationary pressure during economic downturns in the analyzed countries. The empirical outcomes are robust and consistent for both country-specific and panel analyses, but the extent of the inflation response to unemployment is more pronounced in the WAMZ subregion. This study provides valuable insights for policymakers regarding the formulation of sound regional monetary policy.
Using a strict analytical framework, this study investigates the dynamic link between inflation and several macroeconomic variables (unemployment, crude oil prices, and nominal exchange rate) in Pakistan from 1991 to 2019. Utilizing a diverse array of statistical methodologies, including unit root analysis, cointegration analysis, and dynamic ordinary least squares (DOLS), we assess the applicability of the Phillips Curve theory in predicting fluctuations in inflation. According to our findings, Pakistan exhibited a steady Phillips Curve over the study period, with all models demonstrating good tracking performance of changes in inflation. Furthermore, the CUSUM and CUSUMsq tests validate the stability of our estimates. This analysis contributes to our understanding of Pakistani inflation dynamics and has implications for economic policy in the nation.
The Phillips curve has evolved into a systematic instrument that elaborates on macroeconomic analysis, showing the relationship between unemployment and inflation, illustrating the trade-off between achieving full capacity engagement and maintaining price stability. The New Keynesian Phillips curve presumes that expectations of inflation are neither adaptive nor rational, as posited in Lucas's theory. Consequently, a New Keynesian Phillips curve has emerged, distinct from the curve modeled by Phelps and Friedman. In 2023, inflation in the Republic of Serbia (Serbia) peaked at 16.2% in March, gradually declining to 10.2% by September, aided by reduced pressure from food prices. Projected inflation is expected to decelerate further by the end of 2023 and into the following year, influenced by effects and tighter financing conditions. While some increases in 2023 are evident, approximate yearly inflation is expected to be in single digits in 2024, returning within the central bank's target in two years. This paper will present the New Keynesian Phillips curve in the Republic of Serbia (Serbia), as well as macroeconomic predictions for the country.
Büyük Buhran sonrası küresel ölçekte tecrübe edilen yüksek işsizlik oranları, işsizlik olgusunu makroekonominin önemli sorunlarından biri haline getirmiştir. 1970’li yıllardaki petrol şokları sonrasında ise ekonomideki geçici şokların işsizlik oranları üzerinde kalıcı etkilere sebep olabileceği fikri, işsizlik histerisi hipotezini doğurmuş ve söz konusu hipotez klasik makro iktisadi öngörüye bir alternatif olarak ortaya çıkmıştır. Bu çalışma, 2014:1-2023:8 dönemi aylık verilerini kullanarak, Türkiye’de işsizlik histerisi hipotezini; işsizlik oranı, zamana bağlı eksik istihdam ve işsizlerin bütünleşik oranı, işsiz ve potansiyel işgücünün bütünleşik oranı ve atıl işgücü oranı olmak üzere dört farklı boyutuyla Genişletilmiş Dickey-Fuller (ADF), Fourier Genişletilmiş Dickey-Fuller (FADF) ve Kesirli Frekanslı FADF birim kök testleri ile sınamıştır. Geleneksel ve yapısal kırılmaları dikkate alan birim kök testleri sonuçlarına göre işsizlik histerisi hipotezini destekleyen güçlü kanıtlara ulaşılmıştır. Buna göre Türkiye’de işsizlik oranlarındaki sapmalar kalıcı hale gelmekte ve bu sebeple işsizlik, ülke ekonomisi için halen önemli bir yapısal sorun olarak gözükmektedir.
In this article we undertake a verification of the Phillips curve in Polish conditions during the pandemic and the war in Ukraine. The theoretical part introduces evolution of Phillips’s theory and the review of literature and its verification in the conditions of Polish economy. Additionally, theoretical aspects regarding crisis and exogenous shocks are discussed. The aim of the empirical part of the work was to investigate the existence of the Phillips curve in the Polish economy in 2013–2022. The direction and strength of the relationship between inflation and unemployment rates were tested based on monthly data on full period and the pandemic period. In the research econometric methods were used in order to estimate parameters of an autoregressive inflation model, including both the influence of unemployment on the inflation rate and exogenous shock that were caused by periods of economic disruption reflected by binary, sustained and interaction variables. It was concluded that in the pandemic time the effect of the Phillips curve was present and that was accentuated by the war. However, in the longer term, this effect was not perceived as a negative relationship between characteristics under study. Nevertheless, in the full period of the study, disruptions in inflation patterns which were caused by the pandemic and the period of Russian aggression against Ukraine were evident.
Bien que la courbe de Phillips joue un rôle important dans les modèles macroéconomiques, les travaux empiriques ont souvent mis en évidence une baisse, voire une absence, de lien entre inflation et chômage. Cet article montre que la courbe de Phillips reste un cadre pertinent pour analyser l'inflation et comprendre le lien entre l'inflation et le chômage. L'instabilité des estimations résulte à la fois des difficultés à mesurer les tensions sur le marché du travail, ou les anticipations d'inflation, et de la non-linéarité de la courbe. De plus, les changements de stratégie de politique monétaire, à partir des années 1980, et la globalisation des économies pourraient affecter la corrélation entre l'inflation et le chômage. Classification JEL : E31, E32, E37 .
The stability of the inflation rate is a necessary condition for the proper functioning of any capitalist economy. In an economic environment with volatile inflation, the growth of the economy and its distribution among the agents of society is compromised. For this reason, and because in Costa Rica, as in most capitalist nations, the monetary authority is in charge of maintaining price stability, it is necessary to have models capable of predicting the behavior of inflation. on in the country. Along these lines, this work aims to compare two of the main types of basic predictive models found in the literature: univariate autoregressive models, exemplified by ARIMA models, and multivariate models formulated based on the theory. economics, like the Phillips curve.
We discuss how the relative importance of factors that contribute to movements of the US Beveridge curve has changed from 1959 to 2023. We review these factors in the context of a simple flow analogy used to capture the main insights of search and matching theories of the labor market. Changes in inflow rates, related to demographics, accounted for Beveridge curve shifts between 1959 and 2000. A reduction in matching efficiency, that depressed unemployment outflows, shifted the curve outwards in the wake of the Great Recession. In contrast, the most recent shifts in the Beveridge curve appear driven by changes in the eagerness of workers to switch jobs. Finally, we argue that, while the Beveridge curve is a useful tool for relating unemployment and job openings to inflation, the link between these labor market indicators and inflation depends on whether and why the Beveridge curve shifted. Therefore, a careful examination of the factors underlying movements in the Beveridge curve is essential for drawing policy conclusions from the joint behavior of unemployment and job openings.
This empirically-oriented chapter examines the determinants of the disability unemployment gap or the difference in unemployment rates for people with disabilities and for people without disabilities.
One of the oldest economic goals of societies around the world is to increase the welfare level of the society. For this reason, the phenomenon of economic growth has been one of the most studied subjects since history. In this work, the efficacy of production in Turkey's agricultural and industrial sectors on economic growth amongst 1980 and 2022 has been investigated. In addition, inflation and trade deficit data are included as control variables. ARDL bounds test was implemented in the work. Accordingly the outcomes of the work, in the first model, when the share of the agricultural sector in GNP increases by 1%, per capita income decreases by approximately 1.13%. A 1% increment in the inflation rate diminishes per capita income by approximately 0.18%. In the second model, the margin of the industrial sector in GNP has an affirmative efficacy on per capita income. The inflation rate, conversely, has a negatory efficacy on per capita income. When the share of the industrial sector increases by 1%, per capita income increases by approximately 4.5%. A 1% increment in the inflation rate diminishes per capita income by approximately 0.5%. The parameters related to international trade deficit are statistically insignificant.
The Taylor curve is a concept in macroeconomic policy analysis that represents the efficiency frontier of monetary policy. Previous studies have used generalized autoregressive conditional heteroskedasticity (GARCH) models to estimate the conditional volatility of inflation and output gap, which are key inputs for estimating the Taylor curve. However, the sensitivity of these results to the choice of the volatility model can be substantial. The purpose of this study is to compare the performance of the GARCH and stochastic volatility models for estimating the conditional volatilities of output gap and inflation, which are key inputs to the time-varying parameter model used to empirically test the Taylor curve. Sensitivity analysis is conducted by estimating the conditional volatilities using both models and comparing the resulting estimates of the Taylor curve. The results show that the choice of the volatility model can have an impact on the estimated efficiency frontier for the evaluation of pre-financial crisis period in the United States.
L’objectif de ce papier est d’identifier les déterminants du taux de chômage en Algérie sur la période qui s’étale de 1980 à 2019 en utilisant un modèle à retards échelonnés (ARDL). Les résultats de notre investigation empirique montrent que l’évolution du taux de chômage en Algérie dépend amplement des dépenses publiques et de la croissance économique. Résultat admis, d’un point de vue théorique, la création de richesses par extension de la demande publique et privée s’accompagne de la création d’emploi. Résultats probants dans une économie ou l’essentiel de la valeur ajoutée est généré par la transformation des produits de l’exportation des hydrocarbures en dépenses publiques : dépenses d’équipements et politique sociale expansionniste. Par contre, l’inexistence de la relation entre le PIB et le taux de chômage, s’explique par le fait que le PIB est généré en grande partie par les activités de PTPH et les activités de services (essentiellement le commerce de détail), des activités peu créatrices d’emplois.
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