Economic Review, Vol. 68 No. 1, 2017.
Original scientific paper
ANALYSIS OF UNEMPLOYMENT-INFLATION NEXUS IN TIMES OF CRISIS: THE CASE OF CROATIA
Vedran Recher
Marina Matošec
Petra Palić
Abstract
The paper explores the relationship between unemployment and inflation in Croatia, i.e. Phillips curve. Extant domestic and international research attempted to estimate this relationship as means to offer advice with regards to economic policy. However, from literature review, it is clear that the results of conducted empirical research are ambiguous, which represents the main motivation behind this paper. The goal is to estimate the Phillips curve on previously unavailable data after the crisis to consider the potential changes due to the deep and persistent crisis in Croatia. From literature overview it is apparent that there is no consensus on the existence and shape of this relationship. Empirical part of the paper does not confirm the existence of Phillips curve in Croatia, which also suggests the sensitivity of results of empirical research on this topic. It is therefore important to urge caution from decisive interpretations and conclusions from empirical research of the Phillips curve and to sustain from suggestions to policy makers due to the sensitivity of the results and ambiguous empirical findings.
Keywords
inflation; unemployment; crisis; Phillips curve
Hrčak ID:
179103
URI
Publication date:
4.4.2017.
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