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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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    File URL: http://cmss.univnt.ro/wp-content/uploads/vol/split/vol_V_issue_1/CMSS_vol_V_issue_1_art.004.pdf
    File Function: First version, 2017
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    References listed on IDEAS

    as
    1. Saman, Corina & Pauna, Bianca, 2013. "New Keynesian Phillips Curve for Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 159-171, June.
    2. Georgiana BALABAN & Denis VÎNTU, 2010. "Testing the Nonlinearity of the Phillips Curve. Implications for Monetary Policy," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 4(4(545)), pages 101-120, April.
    3. Ciuiu, Daniel, 2013. "Qualitative variables and their reduction possibility. Application to time series models," MPRA Paper 59284, University Library of Munich, Germany, revised Aug 2013.
    4. Nicoleta Ciurila & Bogdan Murarasu, 2008. "Inflation Dynamics in Romania - a New Keynesian Perspective," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 31-38.
    5. Emilia Herman, 2010. "Inflation And Unemployment In The Romanian Economy," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 10(2), pages 157-170.
    6. Robert J. Gordon, 2011. "The History of the Phillips Curve: Consensus and Bifurcation," Economica, London School of Economics and Political Science, vol. 78(309), pages 10-50, January.
    7. Mihaela Simionescu, 2014. "Testing The Existence And Stability Of Phillips Curve In Romania," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 10(1), pages 67-74.
    8. repec:rjr:romjef:v::y:2017:i:2:p:29-44 is not listed on IDEAS
    9. Edward S. Knotek & II, 2007. "How useful is Okun's law?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 73-103.
    10. 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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