What relationship exists between a country’s ongoing real GDP growth per capita, and their immediate unemployment
rate? In this chart below we show the data for 21 advanced
countries, using IMF’s annual outlook data.
On the x-axis we show the expected 2014 unemployment rate, and on the
y-axis we show the median forecasted per capita growth over seven years. A 95% confidence interval is shaded
about the regression line.
At face value, we see an insignificant relationship between these two
variables. The statistical characteristics for this relationship are about a 0.01 value, for both the slope and r2. But if we separate the data into non-euro area countries and those in the euro-area, we see a strong distinction in the relationship. We also population-weight
the country data to de-emphasize smaller countries. One can see the respective results below, alongside the 95% confidence intervals.
The statistical characteristics for the non-euro area
relationship are a -0.2 slope and a 0.4 r2. While for the euro-area
relationship they are about a 0.02 slope and an 0.2 r2.


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