Inflation and unemployment in Switzerland: from 1970 to 2050

We have started writing a new monograph. As always, it’s an exciting process. This time we would like to collect all results on inflation and unemployment in OECD countries and to carry out a rigorous statistical analysis. We include only those OECD members who provide an extensive statistics on inflation, unemployment and labor force. As a result, some countries will not be modeled.

Switzerland was not fully modeled in our monograph on mechanomics. We have written a paper and submitted it to the MPRA. Now it is available via RePEc:


Inflation and unemployment in Switzerland: from 1970 to 2050
Abstract

An empirical model is presented linking inflation and unemployment rate to the change in the level of labour force in Switzerland. The involved variables are found to be cointegrated and we estimate lagged linear deterministic relationships using the method of cumulative curves, a simplified version of the 1D Boundary Elements Method. The model yields very accurate predictions of the inflation rate on a three year horizon. The results are coherent with the models estimated previously for the US, Japan, France and other developed countries and provide additional validation of our quantitative framework based solely on labour force. Finally, given the importance of inflation forecasts for the Swiss monetary policy, we present a prediction extended into 2050 based on official projections of the labour force level.

Theoretical and Practical Research in Economic Fields: Winter Issue

I am happy to inform all readers that the winter issue of the TPREF is now available.

Table of contents:

Macroeconomic Fundamentals and Stock Return Dynamics: International Evidence from the Global Finance Area

Ezzeddine Abaoub, University of 7 November at Carthage
Mongi Arfaoui,  University El Manar
Hammadi Sliti,  University El Manar ... 122

Financial Integration in the four Basins: A Quantitative Comparison
Sergio Alessandrini,  University of Modena and Reggio Emilia … 147

The Law of One Price: Survey of a Failure
Alessio Emanuele Biondo, University of Catania … 168
The Yield Curve and the Prediction on the Business Cycle: A VAR Analysis for the European Union
Giuseppe Cinquegrana ISTAT, Italy
Domenico Sarno, Department of Law and Economics Second University of Naples … 183

Neuroeconomics and Decision Making Process
Mădălina Constantinescu, Spiru Haret University … 210

Differential Games in Non–Renewable Resources Extraction
George E. Halkos, University of Thessaly
George Papageorgiou, University of Thessaly … 219

Consumption in Developed and Emerging Economies
Peter Kadish, Norvik Alternative Investments … 231

Intelligent Agent Approach for Business Process Management
Andy Ştefănescu, University of Craiova … 241

The Australian Phillips curve and more

This blog helps us to voice new ideas before they are formalized in an article or working paper. In many cases, original ideas are partially wrong and mathematics has to be changed severely. This was the case with labour force participation rate and productivity. As a rule, our initial ideas are good enough and do not suffer big changes.

In January 2011, we posted on inflation and unemployment in Australia. Meanwhile we prepared a formal working paper and submitted it to www.arXiv.org and MPRA. The major difference with the blog posts is a complete description of all models and thorough statistical assessment which includes successful tests for cointegration. However, it needs slight polish before we send it to a journal.

Now the paper on Australia is available:

Abstract

A quantitative model is presented linking the rate of inflation and unemployment to the change in the level of labor force. The link between the involved variables is a linear one with all coefficients of individual and generalized models obtained empirically. To achieve the best fit between measured and predicted time series cumulative curves are used as a simplified version of the 1-D boundary elements method. All models for Australia are similar to those obtained for the US, France, Japan and other developed countries and thus validate the concept and related quantitative model.