Dynamics Of Unemployment And Inflation In Western Europe: Solution By The 1- D Boundary Elements Method
Abstract
Using an analog of the boundary elements method in engineering and science, we analyze and model unemployment rate in Austria, Italy, the Netherlands, Sweden, Switzerland, and the United States as a function of inflation and the change in labor force. Originally, the model linking unemployment to inflation and labor force was developed and successfully tested for Austria, Canada, France, Germany, Japan, and the United States. Autoregressive properties of neither of these variables are used to predict their evolution. In this sense, the model is a self-consistent and completely deterministic one without any stochastic component (external shocks) except that associated with measurement errors and changes in measurement units. Nevertheless, the model explains between ~65% and ~95% of the variability in unemployment and inflation. For Italy, the rate of unemployment is predicted at a time horizon of nine (!) years with pseudo out-of-sample root-mean-square forecasting error of 0.55% for the period between 1973 and 2006. One can expect that the unemployment will be growing since 2008 and will reach ~11.4% [±0.6 %] near 2012. After 2012, unemployment in Italy will start to descend.Download Info
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Article provided by Spiru Haret University, Faculty of Financial Management and Accounting Craiova in its journal Journal of Applied Economic Sciences.
Volume (Year): 5 (2010)
Issue (Month): 2(12)/Summer2010 ()
Pages: 94-113
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Web page: http://www2.spiruharet.ro/facultati/facultate.php?id=14
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Related research
Keywords: unemployment; inflation; labor force; boundary integral method; prediction; Western Europe;Find related papers by JEL classification:
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Kitov, Oleg & Kitov, Ivan, 2011.
"A win-win monetary policy in Canada,"
MPRA Paper
29975, University Library of Munich, Germany.
- Oleg KITOV & Ivan KITOV, 2012. "A Win-Win Monetary Policy In Canada," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 6(6(18)/ Su), pages 160-176.
- Oleg Kitov & Ivan Kitov, 2011. "A win-win monetary policy in Canada," Papers 1103.5994, arXiv.org.
- Kitov, Ivan & Kitov, Oleg, 2011.
"The Australian Phillips curve and more,"
MPRA Paper
28762, University Library of Munich, Germany.
- Ivan Kitov & Oleg Kitov, 2011. "The Australian Phillips curve and more," Papers 1102.1851, arXiv.org.
- Oleg Kitov & Ivan Kitov, 2011.
"Inflation and unemployment in Switzerland: from 1970 to 2050,"
Papers
1102.5405, arXiv.org.
- Kitov, Oleg & Kitov, Ivan, 2011. "Inflation and unemployment in Switzerland: from 1970 to 2050," MPRA Paper 28887, University Library of Munich, Germany.
- Kitov, Ivan & Kitov, Oleg, 2012. "Sustainable trends and periodicity in consumer price indices indicate that the era of low energy prices is approaching," MPRA Paper 43392, University Library of Munich, Germany.
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