Evaluation of inflation and unemployment and plotting the Philips curve of the Czech Republic

The Phillips curve was supposed to mean an expansion of the doctrine based on the original regulatory ideas of J. M. Keynes. At the time of its inception (1950s), it gave governments theoretical hope, coming from the possibility of choosing a negative correlation between the price level (P) and the product (Y). Her early denial (at least in the short term) by Milton Friedman, on the other hand, has not changed anything about other applications that are still relevant until present time. In the fact, advantage of Phillips curve is her ability based on broad-spectrum use for any type of national economy. The aim of this work is to determine the shape of the Phillips curve for the Czech Republic in the period from 2000 to the present and to compare its shape with the shape of the original Phillips curve. The method of regression analysis is used here, comparison and prediction are performed using time series. In this paper, we find out what the short-term Phillips curve looks like for the Czech Republic, that it does not coincide with the original Phillips curve, and that in the future we can count on a growing correlation between inflation and unemployment.

Central banks and inflation: where do we stand and how did we get here?

The inability of central banks to attain their target inflation rates in recent years has raised questions about the extent to which central banks can control the inflation process. This paper discusses the evolution of thought and evidence since the 1960s on the determinants of inflation and the role that should be played by central banks. The paper highlights the roles played by two streams of thought associated with Milton Friedman: monetarist theories predicting a key role for monetary aggregates in determining inflation and the rise in popularity of the expectations-augmented Phillips curve. The author discusses the influence of the latter in determining the modern consensus on central-bank institutions and the relative roles for fiscal and monetary policies. The paper concludes with a discussion of macroeconomic developments since 2010 and current policy options to stimulate the economy and restore inflation to its target levels, including the merits of ‘helicopter money’.

The Relationship Between Inflation and Unemployment in Namibia Within the Framework of the Phillips Curve

This study intended to empirically validate the applicability of the Phillips Curve in Namibia since independence, using semi-annual time series data, and taking into account the periods of the annus horribilis of the global financial crises and the Coronavirus Disease pandemic. It further sought to examine the nature of the relationship between inflation and unemployment to determine whether it is short-run or long-run and establish the causal relationship between the variables using various econometric analyses. The unit root tests indicate that the variables were stationary in their level forms, implying the absence of the long-run relationship. Hence, the Ordinary Least Square (OLS) model was performed to measure the short-run relationship between the variables. Results from the OLS analysis reveal a bidirectional nexus between inflation and unemployment, validating the presence of the Phillips Curve in the Namibian economy. These results correspond to the findings that incorporated the periods of economic shocks; thus, adjudging the critics of the Philips Curve regarding the consideration of economic shockwaves to be nonsensical in the Namibian economy. Finally, Granger causality test was conducted to establish the causal relationship between the variables, and results found inflation and unemployment to be unrelated. Based on these findings, the study recommends policymakers to adopt a policy mix, skewed to reducing unemployment predominately among the youth since the issues cannot be addressed simultaneously. Lastly, the study suggests future investigations to assess panel analyses on the phenomenon concerning developing countries, particularly those in the same region. It also recommends a significant focus on the determinants of inflation and unemployment since the variables were found to be independent of each other. This will give accurate directives to policymakers in an attempt to address the matter in terms of policy formulation and assimilation when they understand where the issue is deriving from.

Does Foreign Direct Investment Affect Employment in Guinea: Empirical Assessment

This study shed light on the extent to which foreign direct investment contribute to employment in Guinea. FDI per GDP net inflows and unemployment rate are adopted as key indicators whereas inflation, trade openness, credit to private sector are control variables.  The empirical evidence is computed through ARDL method and the subsequent findings are established: first, foreign investment negatively and insignificantly affects unemployment in the short run. This result may be linked to the fact that a huge portion of FDI in Guinea is resource seeking type which itself does not generate enough jobs in the affiliate firms. Moreover, the interactions between such kind of investment and local suppliers are very limited, mitigating its effect on employment in the supplier’s side. Second, the short term coefficients for inflation and credit to private sector are positive and insignificant, contradicting a popular macroeconomic theory known as Phillips curve.   Overall, government should promote investments that can have transformative effect on domestic economy through linkages and spillovers. Furthermore, special emphasis must be put on human capital (education and healthcare) so that Guinean youth could be more competitive and capable to seize job opportunities offered both by foreign multinationals and local firms.  

The Role of Wage Formation in Empirical Macroeconometric Models

The specification of model equations for nominal wage setting has important implications for the properties of macroeconometric models and requires system thinking and multiple equation modeling. The main models classes are the Phillips curve model (PCM), the wage–price equilibrium correction model (WP-ECM), and the New Keynesian Phillips curve (NKPCM). The PCM was included in the macroeconometric models of the 1960s. The WP‑ECM arrived in the late 1980s. The NKPCM is central in dynamic stochastic general equilibrium models (DSGEs). The three model classes can be interpreted as different specifications of the system of stochastic difference equations that define the supply side of a medium-term macroeconometric model. This calls for an appraisal of the different wage models, in particular in relation to the concept of the non-accelerating inflation rate of unemployment (NAIRU, or natural rate of unemployment), and of the methods and research strategies used. The construction of macroeconomic model used to be based on the combination of theoretical and practical skills in economic modeling. Wage formation was viewed as being forged between the forces of markets and national institutions. In the age of DSGE models, macroeconomics has become more of a theoretical discipline. Nevertheless, producers of DSGE models make use of hybrid forms if an initial theoretical specification fails to meet a benchmark for acceptable data fit. A common ground therefore exists between the NKPC, WP‑ECM, and PCM, and it is feasible to compare the model types empirically.

Testing the Validity of the Long Run Neutrality of Money in Nigeria

Research background: There is no consensus among scholars on the interaction effect between money supply, price, and wages despite various studies conducted to that effect. Purpose: This study investigates whether the neutrality of money assumption holds in the long run in Nigeria, using annual data from 1970 to 2018. Research methodology: The study utilized the Johansen cointegration test and the Vector Error Correction (VECM) approach for estimation. Results: The results from the Phillips curve model contradict the classical school of economics assumption that money is neutral in the long run. This implies that in the Nigerian economy, money is not neutral in the long run. The long run Fishers’ effect model shows that the coefficient of LOG (CPI) exhibits a negative sign and is statistically significant at a 5% significant level, thus contradicting the hypothesis which states that a one percent increase in consumer prices will lead to an increase in the rate of interest by one percent. The coefficient of nominal money supply indicates a negative sign and insignificant statistically on the interest rate. The Short-run estimated results showed that the coefficient of the error correction term ECM (–1) indicates a negative sign and is significant statistically in the Fishers’ effect model. The result shows the actual and equilibrium values are corrected with adjustment speeds equal to 31% yearly. Novelty: The study recommends that the Central Bank of Nigeria should ensure an effective implementation of monetary targeting measures in fine-tuning the economy and curbing inflationary pressures.

Inflation and Macroeconomics in the US during the Golden Age

This paper reviews interpretations of the moderate inflation observed in the US during the 1950s and early 1960s. In this period, moderate and persistent inflation disconcerted economists and challenged policymakers. The opposition between demand-pull and cost-push views stimulated different interpretations, as sectorial demand-shift inflation theory and the modified Phillips curve. As policy targeted growth and employment, incomes policy was applied to contain inflation. The pa-per provides an overview of explanations to the moderate inflationary process in light of the historical events of the Golden Age of capitalism.