I am in the middle of modeling
the relationship between the labor force, unemployment, and price inflation. Twelve years ago we reported several statistical
models revealing a linear lagged relationship between these three parameters in
developed (e.g., USA, UK, Japan, Germany, France, Austria) countries.
It is time to revisit them and validate these models with new data published
since 2010. There are several problems we have to overcome before the published
data can be used in statistical estimates. The most important problem is the
change in definitions of all three parameters. For example, for the USA we
found that the CPI (consumer price index) and dGDP (GDP price deflator) change
their relative behavior due to changes in definitions (e.g., imputed rent). Moreover,
these changes are well described by a linear
relationship.
On the
way to the final statistical analysis of the model, I formulated an interesting idea, the first time in some implicit form in the post “Growth rate of the GDP per capita
revisited. 4. Developed countries – cntd”. The statement was more
qualitative, but I assumed that Germany is the principal beneficiary of the EU.
It is difficult to prove a non-equivalent exchange. The annual increment in real GDP per capita is higher in Germany than in France, Italy, Spain, and the UK. This is a good argument.
There is another possible
indicator related to dGDP and CPI, however. The former is defined only by the prices
of domestic goods and the latter includes prices of imported goods and services.
I do not understand how the mechanism of the non-equivalent exchange works but
the only big country in the EU has the CPI curve higher than the dGDP - Germany. The same configuration is observed in the USA and Japan. In France, Italy, the UK,
Canada, and Australia, the dGDP curve is above the CPI one.
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