Strain and Inflation-Unemployment Relationship in Transitional Economies: A theoretical and empirical investigation
AbstractStandard economic theory tells that a command system, like the former eastern economies, allocates resources poorly due to the impossibility of accurate calculation. Therefore, once prices are freed and start to operate at quasi-equilibrium (market-clearing) levels, the hidden inefficiencies come into the open and a possible massive resource reallocation would have to take place. More precisely, the issue refers to the possible and probable intensity of resource reallocation in view of constraints like the balance between exit and entry in the labour market, the size of the budget deficit and the means for its non-inflationary financing, social and political stability, etc. This paper tries to conceptualise the fact that the dynamics of unemployment and inflation are correlated not in a classical sense but in a very complicated mode that suggests the occurrence of some attractors when certain slow parameters are evolving in the neighbourhood of special threshold-values. The start is made with simple models that are based on empirical data and can show to us the traces to discover the steps of transition in eastern economies on the inflation-unemployment relationship space. Then, using economic theory combined with non-linear modelling more refined information is extracted from the statistical standardised data for to evaluate other faces of the eastern transition.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for Economic Forecasting in its series Working Papers of Institute for Economic Forecasting with number 081103.
Length: 55 pages
Date of creation: Nov 2008
Date of revision:
Contact details of provider:
Postal: Casa Academiei, Calea 13, Septembrie nr.13, sector 5, Bucureşti 761172
Phone: 004 021 3188148
Fax: 004 021 3188148
Web page: http://www.ipe.ro/
More information through EDIRC
natural rate of unemployment; potential function; Hurst exponent; pitchfork bifurcation; modified Phillips curve; Rössler attractor;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-01 (All new papers)
- NEP-CBA-2008-12-01 (Central Banking)
- NEP-LAB-2008-12-01 (Labour Economics)
- NEP-MAC-2008-12-01 (Macroeconomics)
- NEP-TRA-2008-12-01 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daianu, Daniel & Albu, Lucian-Liviu, 1996.
"Strain and the inflation - unemployment relationship: a conceptual and empirical investigation,"
14017, University Library of Munich, Germany.
- Daniel Daianu & Lucian-Liviu Albu, . "Strain and the Inflation - Unemployment Relationship: A Conceptual and Empirical Investigation," Ace Project Memoranda 96/15, Department of Economics, University of Leicester.
- Fischer, Edwin O & Jammernegg, Werner, 1986. "Empirical Investigation of a Catastrophe Theory Extension of the Phillips Curve," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 9-17, February.
- Soliman, A. S., 1996. "Transitions from stable equilibrium points to periodic cycles to chaos in a phillips curve system," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 139-153.
- Santomero, Anthony M & Seater, John J, 1978. "The Inflation-Unemployment Trade-off: A Critique of the Literature," Journal of Economic Literature, American Economic Association, vol. 16(2), pages 499-544, June.
- Dobrescu, Emilian, 2006.
"Double-Conditioned Potential Output,"
Journal for Economic Forecasting,
Institute for Economic Forecasting, vol. 3(1), pages 32-50, March.
- Dobrescu, Emilian, 2004. "Double conditioned potential output," MPRA Paper 35769, University Library of Munich, Germany.
- Dobrescu, Emilian, 2007. "Double Conditioned Potential Output," Working Papers of Institute for Economic Forecasting 070701, Institute for Economic Forecasting.
- Albu, Lucian Liviu, 2005.
"A Dynamic Model To Estimate The “Pure” Productivity,"
Journal for Economic Forecasting,
Institute for Economic Forecasting, vol. 2(1), pages 30-34.
- Albu, Lucian-Liviu, 2005. "A dynamic model to estimate the “pure” productivity," MPRA Paper 13425, University Library of Munich, Germany.
- Albu, Lucian Liviu, 2006. "Trends in the Interest Rate - Investment - GDP Growth Relationship," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(3), pages 5-13, September.
- Albu, Lucian-Liviu & Diaconescu, Tiberiu, 2009. "Simulation on long-term correlation between demographic variables and economic growth," MPRA Paper 33003, University Library of Munich, Germany.
- Albu, Lucian-Liviu, 2006. "A dynamic model to estimate the long-run trends in potential GDP," MPRA Paper 3708, University Library of Munich, Germany.
- Dobrescu, Emilian, 2006. "Integration of macroeconomic behavioural relationships and the input-output block: Romanian modelling experience," MPRA Paper 35748, University Library of Munich, Germany.
- Albu, Lucian-Liviu, 2010. "Scenarios for post-crisis period based on a set of presumed changes in the interest rate – investment – GDP growth relationship," MPRA Paper 32753, University Library of Munich, Germany.
- Dobrescu, Emilian, 2006. "Macromodel of the Romanian market economy (version 2005)," MPRA Paper 35749, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Corina Saman).
If references are entirely missing, you can add them using this form.