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A picture for the coupling of unemployment and inflation

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  • Safdari, H.
  • Hosseiny, A.
  • Vasheghani Farahani, S.
  • Jafari, G.R.

Abstract

The aim of this article is to illustrate the scaling features of two well heard characters in the media; unemployment and inflation. We carry out a scaling analysis on the coupling between unemployment and inflation. This work is based on the wavelet analysis as well as the detrended fluctuation analysis (DFA). Through our analysis we state that while unemployment is time scale invariant, inflation is bi-scale. We show that inflation possess a five year time scale where it experiences different behaviours before and after this scale period. This behaviour of inflation provides basis for the coupling to inherit the stated time interval. Although inflation is bi-scale, it is unemployment that shows a strong multifractality feature. Owing to the cross wavelet analysis we provide a picture that illustrates the dynamics of coupling between unemployment and inflation regarding intensity, direction, and scale. The fact of the matter is that the coupling between inflation and unemployment is not equal in one way compared to the opposite. Regarding the scaling; coupling exhibits different features in various scales. In a sense that although in one scale its correlation behaves in a positive/negative manner, at the same time it can be negative/positive for another scale.

Suggested Citation

  • Safdari, H. & Hosseiny, A. & Vasheghani Farahani, S. & Jafari, G.R., 2016. "A picture for the coupling of unemployment and inflation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 444(C), pages 744-750.
    • Handle: RePEc:eee:phsmap:v:444:y:2016:i:c:p:744-750
    DOI: 10.1016/j.physa.2015.10.072
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    Cited by:

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    6. Kang, Sang Hoon & Lahmiri, Salim & Uddin, Gazi Salah & Arreola Hernandez, Jose & Yoon, Seong-Min, 2020. "Inflation cycle synchronization in ASEAN countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 545(C).
    7. Fernandes, Leonardo H.S. & Araújo, Fernando H.A. & Silva, Igor E.M. & Leite, Urbanno P.S. & de Lima, Neílson F. & Stosic, Tatijana & Ferreira, Tiago A.E., 2020. "Multifractal behavior in the dynamics of Brazilian inflation indices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 550(C).
    8. Jamshid Ardalankia & Mohammad Osoolian & Emmanuel Haven & G. Reza Jafari, 2019. "Scaling Features of Price-Volume Cross-Correlation," Papers 1903.01744, arXiv.org, revised Aug 2020.

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