| Abstract [eng] |
Many economists and politicians in different countries are trying to solve a problem - volatile inflation process and the stability of natural unemployment. First, would need to find out what causes and making negative effects between two macroeconomic sizes, which makes a negative effect on the country's economy. As different economic structure due to historical circumstances, geographical location and social factor also contribute to these assumptions. The work consists of three main parts; the analysis of literature, the research and its results, conclusion. Literature analysis reviews that unemployment rate concepts are discussed by Lithuanian and foreign authors. They are presenting various concepts of unemployment: trying to classify by factors and identify problems. Natural sources of unemployment and its relations to inflation and unemployment are widely studied in scientific sources. At the same time, Philips curve emerged about the justification for the inverse relationship between unemployment and inflation. After the literature analysis the author has estimated Lithuania's natural unemployment rate using different econometric models. Linear models (VAR and VECM) and nonlinear (GAR, BL and TAR) were chosen. The conclusions summarize that the overall unemployment rate does not affect the Gross Domestic Product gaps and does not raise the price level. Although Vector Error Correction model has better abilities than Vector autoregression model also does not indicate direct effects on prices, but like VECM as same as VAR indicates an indirect effect on prices - through a GDP gap which tends to increase prices. Nonlinear models - GAR, BL and TAR differ from each other. The GAR and BL models are intended for use when the functional form is not known. Unlike GAR or BL models, TARs have a correction mechanism that is inherent in the economic system. |
