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The Phillips Curve for the Romanian Economy, 1992-2017

Author

Listed:
  • Dorin Jula

    (Institute for Economic Forecasting – Romanian Academy and Faculty of Economic Sciences – Ecological University of Bucharest)

  • Nicoleta Jula

    (Department of Finance, University of Ilorin, Kwara State, Nigeria)

Abstract

The paper analyses the relationship between the unemployment rate and inflation, in Romania, during the 1992 – 1997 (March) period. For this purpose, we have estimated two econometric models, where the inflation trend has considered as a benchmark for inflation dynamics and the unemployment gap was built after applying the Hodrick-Prescott (HP) filter at unemployment rate. We have found that the unemployment gap had the greatest relevance in inflation model if we have taken a four months delay. The data support the hypothesis of a significant relationship between inflation and unemployment, with the shape described by the Phillips curve, namely the coefficients of unemployment gap were negative, econometrically significant and comparable as dimension in both models of inflation dynamics. We have calculated that the coefficient of unemployment gap is -0.344 in the Phillips curve model where the errors follow an ARMA(2, 2) process and -0.386 in the model which includes the inflation inertia., 36-48

Suggested Citation

  • Dorin Jula & Nicoleta Jula, 2017. "The Phillips Curve for the Romanian Economy, 1992-2017," Computational Methods in Social Sciences (CMSS), "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences, vol. 5(1), pages 36-48, June.
  • Handle: RePEc:ntu:ntcmss:vol5-iss1-17-36
    as

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    References listed on IDEAS

    as
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    6. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
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    Full references (including those not matched with items on IDEAS)

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