Unemployment Rate (Friedman and Phelps)

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.