ინფლაციისა და უმუშევრობის დინამიკის ეკონომეტრიკული მოდელირება

In this research we analyze many different theories to explain the relationship between two
main macroeconomic variables: inflation and unemployement. The research is based on the
economy of Georgia, in particular we estimate whether Philips curve is valid for our economic
situation during the recent twenty years.
The main goal of this research is to explore the relationship between inflation and
unemployement both in short run and long run periods. Understanding this relationship is crucial
for policimakers because these macroeconomic variables have a big impact on the people’s
standards of living. There are multiple theories investigating this relationship, some are
controversial. We try to explore what kind of relationship between these variables exist in Georgia.
In the first section of this research, we review the literature in detail. In the second section
we explain the macroeconomic environment in which we are going to conduct our research. In
this section we also represent inflation, its main determinants and expected consequences. Then we
analyze theories about unemployment and the natural rate of unemployment.
In the third section we estimate different models to explain the connection between
inflation and unemployement. At first, we estimate traditional Philip’s model using ordinary least
squares. Then we expand our model incorporating other important variables. We also use Vector
autoregressive model (VAR). Then we use ARDL and ECM models, to analyze the short run and
the long run effects of this relationship.