Inflation Uncertainty and Unemployment: Some International Evidence

Abstract

This research examined whether the uncertainty associated with the volatility of inflation impacted unemployment in the G7 countries over the last two decades. The results indicate that inflation variability had a significant short-run effect upon the unemployment rate in Canada, France, Italy, and the US while no effect was found for Germany, Japan, or the UK. However, consistent with economic theory, we find no evidence of a long-run trade-off between inflation variability and unemployment.