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Inflation, unemployment, labor force change in European countries

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  • Kitov, Ivan

Abstract

Linear relationships between inflation, unemployment, and labor force are obtained for two European countries - Austria and France. The best fit models of inflation as a linear and lagged function of labor force change rate and unemployment explain more than 90% of observed variation (R2>0.9). Labor force projections for Austria provide a forecast of decreasing inflation for the next ten years. In France, inflation lags by four years behind labor force change and unemployment allowing for an exact prediction at a four-year horizon. Standard error of such a prediction is lower than 1%. The results confirm those obtained for the USA and Japan and provide strong evidences in favor of the concept of labor force growth as the only driving force behind unemployment and inflation.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14557.

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Date of creation: 01 Jan 2007
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Handle: RePEc:pra:mprapa:14557

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Keywords: inflation; unemployment; labor force; modeling;

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  7. Kitov, Ivan, 2006. "Real GDP per capita in developed countries," MPRA Paper 2738, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Kitov, Ivan & Kitov, Oleg, 2009. "A fair price for motor fuel in the United States," MPRA Paper 15039, University Library of Munich, Germany.
  2. Kitov, Ivan & Kitov, Oleg & Dolinskaya, Svetlana, 2007. "Inflation as a function of labor force change rate: cointegration test for the USA," MPRA Paper 2734, University Library of Munich, Germany.
  3. Kitov, Ivan, 2007. "Exact prediction of inflation and unemployment in Germany," MPRA Paper 5088, University Library of Munich, Germany.
  4. Oleg KITOV & Ivan KITOV, 2012. "Inflation And Unemployment In Switzerland: From 1970 To 2050," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 7(2(20)/ Su), pages 141-156.
  5. Ivan Kitov & Oleg Kitov & Svetlana Dolinskaya, 2007. "Linear Lagged Relationship Between Inflation, Unemployment and Labor Force Change Rate in France: Cointegration Test," Mechonomics, Socionet mechonomics2, Socionet.
  6. Kitov, Ivan, 2006. "The Japanese economy," MPRA Paper 2737, University Library of Munich, Germany.
  7. Ivan O. Kitov & Oleg I. Kitov & Svetlana A. Dolinskaya, 2008. "Relationship between inflation, unemployment and labor force change rate in France: cointegration test," Papers 0811.0896, arXiv.org.
  8. Kitov, Ivan, 2009. "The anti-Phillips curve," MPRA Paper 13641, University Library of Munich, Germany.

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