Developed Countries and Economically Developed Countries

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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...

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...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.

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