Unemployment and Inflation

Paper Summary:

This paper looks at the issues of unemployment and inflation and discusses them in detail, to understand their causes, and see the relation between the two. The author provides a literature review and describes different types of inflation, its relation to unemployment, and ways to counter it.

Outline:
Literature review
Different types of unemployment
Empirical work
Analysis of inflation (Demand-Pull/Cost-Pull)

From the Paper:

""Until the 1960's countries with high inflation tended to have relatively full employment and countries with high unemployment tended to have relatively stable prices. Policy conflicts were common, as most of the policies for dealing with inflation led to an increase in unemployment and, conversely, most of the policies for dealing with unemployment led to an increase in inflation. In 1970's and early 1980's these difficulties were compounded as most of the countries, including UK, faced both high unemployment and high inflation". (Hardwick, 1987).
"Over the last two decades, inflation has varied considerably. It tends to follow a cyclical pattern: increasing at boom periods of the trade cycle, and falling when economic growth slows down" (Bized 2005). As unemployment and inflation tend to go hand in hand, unemployment tends to go down during the boom periods as inflation rises, and increases when an economy slows down."

Sample of Sources Used:

• Dawson, Graham. (1988) Costs of unemployment versus the costs of inflation. Buckingham: Employment Research Centre.
• Dawson, Graham. (1992) Inflation and unemployment : causes, consequences, and cures. Brookfield: Edward Elgar.
• Gowland, David. (1991) Money, Inflation and Unemployment. Secondth ed. Hertfordshire: Harvester Wheatsheaf.
• Hardwick, Philip. (1987) The Problems of Unemployment and Inflation. 1st ed. London: Longman.
• Perlman, Richard, and James J. Hughes. (1984) The Economics of Unemployment. 1stst ed. Brighton: John Spiers.

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