Qiheng Wu, Weber State University
Business
Research Question
How is the inflation rate related to the unemployment rate in Greece in the last 24 years?
Purpose
Nowadays, many countries are facing financial or economic problems. Greece, a member of Eurozone, is suffering from their economic puzzles right now. Greece got the level of CCC from sovereign credit ratings agency (AFP 2011). According to a recent report, the unemployment rate of Greece in July was 26.4%. That is an incredibly high number compared with other countries in the world but a good sign for Greece because it shows that the unemployment rate is easing slightly after reaching a peak of 28% in September 2013. At the meantime, the unemployment rate is extremely high in Greece, too. This literature is going to study Greece’s crisis in terms of the relationship between inflation rate and unemployment rate. We hope we can find some causal relationship between inflation and unemployment rates in Greece and link it to Phillips Curve, which may give us some answers about what’s the impact of being a member of Eurozone to Greece’s economy.
Research method
In this research paper, we are going to compare with the data of 12 years before Greece joined the Eurozone and the data 12 years after that. In order to find the relationship between inflation rate and unemployment rate, we will put other possible factors such into “µ” and we will put the unemployment rate as a dependent variable and put the inflation rate as the independent variable to run two regressions with the same regression model but two time periods: Unemployment rate = ß0 + ß1 * Inflation rate + µ. (before 2001) Unemployment rate = ß0 + ß1 * Inflation rate + µ. (after 2001).