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Unemployment Rate. The national unemployment rate fell to 4.4 percent in
October the lowest level of unemployment since May 2001. ...
Unemployment. Unemployment In ... Economists have described the types of
unemployment as frictional, structural, and cyclical. The first ...
Unemployment In Australia And Policies To Reduce It. ... The same reasoning could be
applied to explain our recent decline in the natural unemployment rate. ...
unemployment. ... Unemployment is widely used as a measure of workers' welfare because
of the human costs and feelings of rejection and personal failure. ...
Unemployment. Unemployment By getting the proper education and applying for a job,
our unemployment has a good chance of decreasing a fair amount. ...
Submitted by veron on April 23, 2006
Category: Business
Words: 5113 | Pages: 21
Views: 437
Popularity Rank: 19,581
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There is a principal assumption of the existence of a tight link between inflation and unemployment known as the Phillips curve. The concept of the Phillips curve serves as a basis for many macroeconomic models and business cycle theories. There is no "completely satisfactory explanation" [Mankiw, 2000] of this virtual tradeoff, however. Existing models meet severe problems to explain some outstanding features of the presumed tradeoff between inflation and unemployment, such as, for example, stagflation and disinflation accompanying decreasing unemployment, without using some exotic exogenous forces or shocks. This lack of proof or demonstration of even a weak empirical confirmation of the relationship does not prevent "central bankers and monetary economists" [Mankiw, 2000] from adhering to its usage in practice. Hence, any clear explanation of the existence of tradeoff between inflation and unemployment, or its absence, in which case the bankers, monetary policy-makers and economists are wrong in their unproven assumption, is of great value. We show below that there is no tradeoff between unemployment and inflation. Fortunately, the period between 1990 and 2010 is characterized by just minor changes of the studied variables. This is what makes current policy so "successful". There are some challenges arising in near future, however.
In the first section, we argue that the presumed relationship between inflation and unemployment is just a simple lagged linear function with a positive coefficient. This effectively means that, if accordingly modified, the Phillips curve is an upward-sloping function with a coefficient close to one, but where unemployment does not affect inflation.
If unemployment in the USA is a lagged linear function of inflation, it is important to find the potential forces driving the inflation itself. The macroeconomic model developed by Kitov [2005a,b] provides a consistent framework for such an analysis. The two principal...
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