Exact prediction of inflation and unemployment in Germany
Ivan O. Kitov
Abstract
Potential links between inflation, π(t), and unemployment, UE(t), in Germany have been examined. There exists a consistent (conventional) Phillips curve despite some changes in monetary policy. This Phillips curve is characterized by a negative relation between inflation and unemployment with the latter leading the former by one year: UE(t-1) = -1.50π(t) + 0.116. Effectively, growing unemployment has resulted in decreasing inflation since 1971, i.e. for the period where GDP deflator observations are available. The relation between inflation and unemployment is statistically reliable with R2=0.86, where unemployment spans the range from 0.01 to 0.12
…show more content…
Estimates of the total labor force have been revised from 1987 on, based on census results, and show a break between 1986 and 1987. Prior to 1984, annual data for the labor force are averages of monthly and annual estimates supplied by German authorities.
Annual unemployment figures correspond to unemployed persons registered at the end of the month of September of each year. From 1984, annual average figures are consistent in terms of methodology and contents with the results of the annual European Labour Force Survey based on the national Microcensus conducted once a year in April.
2
Therefore one might expect some breaks in linear relationships between the studied variables: labor force, inflation, and unemployment. However, as shown in
Section 1, the Phillips curve for Germany demonstrates no breaks. The absence of any breaks evidences in favor of general comparability of the measurements over time.
This paper is primarily aimed at revealing the generalized relationship between the change rate of labor force level, inflation and unemployment in Germany. Also, individual relationships between the change rate and inflation, and the change rate and unemployment are investigated.
These relationships allow answering fundamental
questions addresses in numerous studies of inflation and unemployment. For example,
Can central
iii. How does the average annual growth rate you calculated in (ii) above compare to the average growth rate the U.S. normally expects?
During a time in which white supremacy was being challenged by an ever-increasing African population, a woman named Margaret Sanger “sought to purify America’s breeding stock and purge America’s bad stains” (Planned Parenthood). She set out to establish the American Birth Control League, which eventually became the Planned Parenthood Federation of America (PPFA). Sanger’s actions provoked much controversy because at the time not only was contraception illegal in the United States, but it was denounced by almost every major religious denomination (Contraception History). Margaret Sanger set out on a mission to overcome first the church and then the state in order to “stop bringing to
1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).
When you think of college athletes you often don't think about them getting paid. College athletes and whether or not they should get paid is a hotly debated topic that is likely not to end any time soon. It has gone on for many many years and no conclusion can be seen in the near future for the vigorously debated topic. The debate really picked up again when Kevin Ware suffered a compound fracture to his right leg which stuck several inches out of his shin. Injuries like this one often time end careers that have not even begun. It is sad to see young players get hurt and never be able to continue their career. It is also very unfortunate when players get hurt and their careers end before they have taken off. Every player in college basketball wants to walk of the court winning a national championship, but most can’t walk off the floor at the end of their career with the confetti flying from the ceiling and the stadium videoboard playing their picture to all their fans. Although most athletes can’t win a national championship to end their career some athletes don't even have a chance at that dream. VCU’s senior guard Briante Weber tore a knee ligament in a game that ended his college career. Unfortunately he won’t get the chance to play for VCU on his senior night, or to play in the NCAA Tournament. Weber was going to be
The Undesirable temporary connection between Price increases and Unemployment. The inflation is calculated along the perpendicular axis, and the unemployment percentage is calculated along the plane axis. This can disturb both the unemployment percentage or the price increases, it can disturb the splurging and the economy. It will partake in temporary impacts in anticipation of the economy being secure.
Compile these pieces into a coherent recommendation to Ms. Jones. Should she bring her guava jelly business to the United States? What is the outlook for the economic health of the nation? Type a Word document incorporating the leading economic indicators and the information Ms. Jones is interested in.
The United States inflation rates are a problem, if the government were to control them then the United States would flourish from a “B+” economy to a “A” economy. In the United States (September, 2015) consumer prices went up 1.5%,
If they are right, what are the implications for unemployment? What kind of unemployment would be affected?
The unemployment rate in the United States has improved dramatically over the last two years, from a high of 8.3% in July 2012, to a low of 6.6% in January 2014. In October of 2012, the civilian labor force increased from 578,000 to 155.6 million, labor force participation increased up to 63.8%, and total employment overall rose by 410,000! Since then, the unemployment rate has been falling at a stable rate due to a political push from Washington DC and new employment initiatives. The inflation rate over the last 2 years has been relatively stably, with a few major increases and decreases in 2012 and 2013. It reached a high of 2.3% in June of 2012, and reached a low of 1.0% at the end of 2013. The federal interest rate has remained at a constant .25% over the past few years.
The debate about the relationship between inflation and unemployment is mainly based on the famous “Phillips Curve”. This curve was first discovered by a New Zealand born economist called Allan William Phillips. In 1958, A. W. Phillips published an article “The relationship between unemployment and the rate of change of money wages in the United Kingdom, 1861-1957”, in which he showed a negative correlation between inflation and unemployment (Phillips 1958). When the unemployment rate is low, the inflation rate tends to be high, and when unemployment is high, the inflation rate tends to be low, even to be negative.
Monetary policy effects the GDP inflation. “Between 1996 and 2000, real GDP in the United States expanded briskly and the price level rose only slowly. The economy experienced neither significant unemployment nor inflation. Some observes felt that the United States had entered a “new ear” in which business cycle was dead. But that wishful thinking came to an end in March 2001, when the economy entered its ninth recession since 1950. Since 1970, real GDP has declined in the United States in five periods: 1973-1975, 1980, 1981-1982, 1990-1991 and
Discuss the role of government policy in reducing unemployment and inflation. In your discussion make use of the diagrammatic representation of the macroeconomy developed in lectures in Term 2
In any economy, no matter whether it is controlled by the government or by free markets, people need to work in order to support it. The government does not generate tax revenue by magic. There have to be people in that economy earning an income to ensure that the government continues to collect taxes. In a free market economy, the same applies because there are some services which only an organized government can supply (such as protection from extra-national threats), but there also those which the people get for themselves because of the working of the markets. In any scenario, unemployment is, at the very least, a drag on the economy, and it can be much worse. This paper examines how the unemployment rate in the United States is underreported, and how that fact effects the sluggishness of the present economy.
In the 70’s Friedman developed his theory of inflation on the correlation of inflation and unemployment on the basis of a critical analysis of the (Keynesian) Phillip’s curve. The key elements in the examination of the mutual links between the inflation process and the situation in the labor market are in his construct a natural rate of unemployment, (adaptive) expectations of inflation, as well as a
It is a belief that one’s own culture is superior to that of others. Due to this feeling, any element from another culture that is different with one’s own culture, is considered wrong, bad or even dangerous. Just like the feeling that people of Israel think about themselves that is they are the chosen people of Allah SWT.