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`UR = NUR - a( "ai" - "ei" )`
Enter a value for all fields
The Unemployment Rate (Friedman and Phelps) calculator computes the unemployment rate as a function of the natural unemployment rate (nur), a sensitivity parameter (a) and the actual (ai) and expected (ei) inflation rates. The parameter (a) is a factor to indicate unemployment's reaction to unexpected inflation.
INSTRUCTIONS: Enter the following:
- (NUR) Natural Unemployment Rate
- (a) Sensitivity Parameter that indicates how much unemployment responds to unexpected inflation.
- (ai) Actual Inflation Rate
- (ei) Expected Inflation Rate
Unemployment Rate (UR): The calculator returns the rate as a percentage.
The Math / Science
The Friedman and Phelps formula for Unemployment rate is:
UR = NUR - a(ai-ei)
where:
- UR = Unemployment Rate
- NUR = Natural Unemployment Rate
- a = Sensitivity Parameter
- ai = Actual Inflation Rate
- ei = Expected Inflation Rate
Macroeconomics Calculators
- Income Elasticity of Demand
- Cross-Price Elasticity of Demand
- Price Elasticity of Demand
- Price Elasticity of Supply
- Total Surplus
- Consumer Surplus
- Producer Surplus
- GDP Growth
- GDP Deflator
- GDP by Income
- GDP Expenditure
- Net Capital Outflow
- Net Exports and Net Capital Outflow
- Dollar Conversion from Different Times
- Unemployment Rate (Friedman and Phelps)
- National Saving
- Domestic Investment
- Unemployment Rate
- Inflation Rate in Year 2 (using CPI)
- Labor Force
- Labor-Force Participation Rate
- Net Exports
- Real Exchange Rate
- Currency Converter
- Midpoint Method for Price Elasticity of Demand
- Income Elasticity of Demand
- Simple Price Elasticity of Demand
The Math / Science
The formula for Unemployment Rate is:
UR = NUR - a(ai - ei)
where:
- UR is the Friedman Phelps Unemployment Rate
- NUR is the Natural of Unemployment Rate
- a is a Sensitivity Factor
- ai is the Actual Inflation Rate
- ei is the Expected Inflation Rate
Resource:
- Boundless. “The Short-Run Phillips Curve.” Boundless Economics. Boundless, 28 May. 2015. Retrieved 30 May. 2015 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/inflation-and-unemployment-23/the-relationship-between-inflation-and-unemployment-105/the-short-run-phillips-curve-402-12499/
- Mankiw, N. Gregory. "Chapter 22:Shifts in the Phillips Curve: The Role of Expectations." Principles of Macroeconomics. 6th ed. Mason, OH: Thomson/South-Western, 2004. 493-97. Print.