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Inflation volatility and unemployment in industrial countries

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  • Horst Feldmann

Abstract

Using annual data on 20 industrial countries over the period from 1972 to 2003, this article analyses the impact of inflation volatility on unemployment. It finds that higher volatility over the previous 10 years is associated with a higher unemployment rate in the current year. The effect appears to be small in the short run and medium sized in the long run. The results are robust to variations in specification and sample size. The magnitude of the effect is not smaller if the sample is limited to the more recent sub-period of comparatively low inflation volatility.

Suggested Citation

  • Horst Feldmann, 2012. "Inflation volatility and unemployment in industrial countries," Applied Economics, Taylor & Francis Journals, vol. 44(1), pages 49-64, January.
    • Handle: RePEc:taf:applec:44:y:2012:i:1:p:49-64
    DOI: 10.1080/00036846.2010.498369
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Christopher Bowdler & Adeel Malik, 2005. "Openness and inflation volatility: cross-country evidence," CSAE Working Paper Series 2005-08, Centre for the Study of African Economies, University of Oxford.
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    Cited by:

    1. Christoph S. Weber, 2020. "The unemployment effect of central bank transparency," Empirical Economics, Springer, vol. 59(6), pages 2947-2975, December.

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