Developed Countries and Economically Developed Countries

918 Words2 Pages
bulb-icon

Recommended: The relationship between unemployment and inflation

The developed country can be classified also as the advanced country, more developed country (MDC), and more economically developed country (MEDC). Developed country means the country that sovereign state and has a highly growth of economics and modern technological infrastructure compare to the developing country and least developed country. There are several previous studies that have been done on the relationship between inflation rate and unemployment rate in developed country such as by Hogan (United State), Sack’l en (Sweden) and Andrei (Romania). They are done the same research with different method to get same objective. The most of the study is use a VECM method in their research. While, there is a few of the study was used a VAR method.

2.1.1 United States

Related to the topic research which is relationship between inflation rate and unemployment rate, the developed country also involved in these two factors economics relationships. As we know United State is one of the most developed countries in the world because it has a highest and modern technological infrastructure and plays important role in world economics. United State is one of the Veto Power countries. For United State country, they are several research were conduct for the relationship between inflation rate and unemployment rate, Mankiw (2000), Sackl’ en (2006), and Berentsen (2011). All of these previous researches employed various approaches to achieve the same objective. Hogan (1998) said that exist a negative relationship between this two variable in a short run. The low of unemployment rate in United State has increased the inflation rate. Using the estimation of Phillips Curves model that has apply in the research, his conclude that the non-accelerat...

... middle of paper ...

...ip Curve theory holds are true in Romania country.

In addition, Andrei T. P. et al (2002) has agreed with their research that objective is to examine out the relationships between three key economic variables from an economy which is inflation rate, unemployment rate and the size of the informal economy during year (1998-2009). As a result the estimation of the Philips curve model parameters stressed the negative linear dependence between unemployment and inflation rate. Equally, for the period 1998-2009, is determined a value of the Some Comments Concerning Informal Economy, Unemployment and Inflation natural unemployment rate. By introducing a variable which measures the size of the informal economy into the classical model of Philips's curve allows the identification of a linear dependence between the unemployment rate and the size of the informal economy.

Show More
Related

  • The Pros And Cons Of Macropoland

    719 Words  | 2 Pages

    First, I will discuss the time period between 1973-1974. Because the unemployment and inflation rates are higher than normal, we can assume that the aggregate-demand curve is downward-sloping. When the aggregate-demand curve is downward-sloping, we know that the economy’s demand has slowed down. When the economy’s demand has slowed down, businesses have to choice but to raise prices and lay off workers in order to preserve profits. When employers throughout the country respond to their decrease in demand the same way, unemployment increases.

    Read More

  • Current Macroeconomic Situation in the United States

    883 Words  | 2 Pages

    In conclusion, the current macroeconomic situation in the United States is characterized by moderate growth because of better economic conditions that were brought by the events of 2013. The country has experienced moderate economic growth since the 2008 global recession but has shown real signs of momentum. While the country is not concerned about recession or inflation, the rate of unemployment is still a major challenge despite improved consumer and business confidence. As a result, the Federal Open Market Committee or Federal Reserve System needs to adopt fiscal and monetary policy initiatives that help address the unemployment issue and promote high economic growth.

    Read More

  • Macroeconomics In Unemployment

    1233 Words  | 3 Pages

    Ejim, Esther, and Kaci Lane Hindman. "What Is the Relationship between GDP and Unemployment Rates?" WiseGEEK. Conjecture Corporation, 13 June 2017. Web. 04 July 2017.

    Read More

  • What´s Macro Policy: The Adaptive Expectations Theory

    1501 Words  | 4 Pages

    The adaptive expectations theory assumes people form their expectations on future inflation on the basis of previous and present inflation rates and only gradually change their expectations as experience unfolds. In this theory, there is a short-run tradeoff between inflation and unemployment which does not exist in the long-run. Any attempt to reduce the unemployment rate blow the natural rate sets in motion forces which destabilize the Phillips Curve and shift it rightward.

    Read More

  • Poverty in Less Developed Countries

    469 Words  | 1 Pages

    Poverty in Developing and Less Developed Countries The world includes less developed countries and developing countries. Less developed countries are countries considered to be poor and often contain many people who are in absolute poverty. Developing countries are countries like India, which are gaining in wealth. There are two types of poverty within the world.

    Read More

  • Inflation in Thailand and Indonesia and the Asian Financial Crisis

    522 Words  | 2 Pages

    There is a close relationship between Gross Domestic Product (GDP) and the unemployment rate as it will relate to the decrease or increase of inflation rate. The inflation rate will increase when GDP and unemployment decreases, because it will affect the purchasing power of the people of a particular country.

    Read More

  • Macroeconomics Of Unemployment

    1238 Words  | 3 Pages

    Unemployment is a macroeconomic factor that is pertinent to an extensive economy at a regional level. Therefore it affects a large population rather than a few select individuals. Unemployment does not only have social costs, but economic costs too. The ILO, International Labour organization, defines unemployment as, ''People of working age, who are without work, but available for work and actively seeking employment.'' Therefore implying that it is a state of an individual looking for a job but not having one. Unemployment is one of the key indicators in determining the economic stability of a country; hence governments, businesses and consumers closely monitor it. There are numerous aspects that might lead to unemployment such as labour market conflicts and recessions in the economy. There are two main types of unemployment, which can be focused on, seasonal and cyclical unemployment. Seasonal unemployment occurs when a person is unemployed or their profession is not in demand during a particular season. On the contrary, cyclical unemployment occurs when there is less demand for goods and services in the market so consequently supply needs to be decreased.

    Read More

  • Recent Trends in Economic Variables

    724 Words  | 2 Pages

    In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes.

    Read More

  • More Economically Developed Countries and Less Economically Developed Countries

    929 Words  | 2 Pages

    Comparison Between MEDC and LEDC The comparisons between MEDC- More Economically Developed Country and LEDC-Less Economically Developed Country are many and varied but are mainly related to finance which gives the MEDC a higher standard of living for its occupants than those of the LEDC. Geographically most MEDC are situated in the northern hemisphere were as the LEDC are mostly in the southern hemisphere. Most MEDC are well advanced or have completed their development period for example the United Kingdom were as the LEDC are still in the early stages. Development of a country can be shown in a demographic transition model; this model consists of four stages.

    Read More

  • Relationship Between Inflation and Unemployment

    1860 Words  | 4 Pages

    The debate of the relationship between inflation and unemployment is mainly based on the famous “Phillips Curve”. This curve was first discovered by a New Zealand born economist called Allan William Phillips. In 1958, A. W. Phillips published an article “The relationship between unemployment and the rate of change of money wages in the United Kingdom, 1861-1957”, in which he showed a negative correlation between inflation and unemployment (Phillips 1958). As shown in figure 1, when unemployment rate is low, the inflation rate tends to be high, and when unemployment is high, the inflation rate tends to be low, even to be negative.

    Read More

  • Causes Of Inflation Essay

    1416 Words  | 3 Pages

    Inflation is defined as an increase in the expected price level and has been the signal for an improving economy, but it has also weakened an economy due to the unemployment it usually produces which usually hurts the Middle class the most. A healthy rate of inflation means an expanding economy due to higher tax revenues for the government and higher wages for businesses that are booming due to the high demand of their products. But if inflation surpasses of what is expected than employer will have to reduce wages to meet these new prices. When the Federal Reserve creates inflation most argue that this is robbing people of the money that they have saved because they have to use it due to the rise in prices. Printing

    Read More

  • Business Impact of the Super Bowl

    1672 Words  | 4 Pages

    The economy in the United States was recently experiencing what is now called the Great Recession which occurred from December of 2007 to June of 2009. During this recession we experienced a decrease in our gross domestic product and experienced an increase to our unemployment. Since 2003 the American economy has been seen inflation rates as low as .1% in 2008 and as high as 4.1% in 2007. Rates such as these detail the increase and decrease in prices of products throughout the economy and has a considerable influence on the supply and demand of goods from cars to bread. In the past ten years inflation rates have continually seen positive values w...

    Read More

  • The Impact of Teenage Unemployment and Possible Solutions

    915 Words  | 2 Pages

    Unemployment has always been something that Americans have worried about since the great depression in which one in every four people was unemployed. High unemployment has an impact on every one even those whom are still currently employed. For example if the unemployment rate is particular high then even those with jobs get worried. Unemployment is also separated in to distinct categories base on which group is the focus of the study. The categories can be by race, age or location, for example the unemployment rate of those between the age of sixty and sixty-five could be compared those between the ages of thirty and thirty-five. These categories allow economist to see which groups are the best and which groups are worst off. One group particularly bad off is the age group referred to as teenagers. This paper is going to focus on how teenage unemployment affects the economy and what possible solutions there are.

    Read More

  • International Development in Developing Countries

    2380 Words  | 5 Pages

    “…increasing international trade and financial flows since the Second World War have fostered sustained economic growth over the long term in the world’s high-income states. Some with idle incomes have prospered as well, but low-income economies generally have not made significant gains. The growing world economy has not produced balanced, healthy economic growth in the poorer states. Instead, the cycle of underdevelopment more aptly describes their plight. In the context of weak economies, the negative effects of international trade and foreign investments have been devastating. Issues of trade and currency values preoccupy the economic policies of states with low-income economies even more than those with high incomes because the downturns are far more debilitating.1”

    Read More

  • Economic Growth and Development

    884 Words  | 2 Pages

    It is natural to be misled by the idea that economic growth is the key

    Read More

More about Developed Countries and Economically Developed Countries

Open Document