Trend charts: Inflation & Unemployment predictions
Here is a nice set of charts that try to correlate inflation and unemployment in the states and see what best can be done now.
“The Federal Reserve is said to have a “dual mandate”: keeping inflation in check and the unemployment rate low. These measures, which tend to change cyclically and in concert with each other, are charted for every year since the Great Depression.
In speeches and in meetings, Ms. Yellen, the nominee for the next Fed leader, has commented on the Fed’s actions during significant periods, providing a window into her views and priorities.”
The question is can anything be predicted from these charts?
Is it that by keeping inflation low we can boost employment?
It is difficult to say since there seems to be no linear relationship between the two factors.
What is seen instead is the non-linear dynamic nature of both the parameters.
If so, what needs to be done is anybody’s guess.
One thought on “Trend charts: Inflation & Unemployment predictions”
First we must decide Intent. As I am interested in History – The Nemetics Way, my intent is looking for patterns in history. Note this is irrelevant to policy decisions. As you have said job one is What. I will leave Why for another time or not go there at all.
For our research fellows: Create one variable of unemployment/inflation relationship. A simple proportion eith V/I or I/V. Then plot against Time. Try it with normal graph paper. Then try again with log paper.
The conjecture is we will find interesting things when wars end. WWII 1945, Vietnam War 1972, Cold War 1991. The notion is these are critical junctures where the historical contingencies move different national governance institutions in different directions.
I take both unemployment and inflations as dependent variables. The underlying independent variables are flows of people and the information technologies that speed up the flow of interaction. Constraints in this case is the organization of governance..