Abstract:
The main purpose of the present study is to investigate relation between inflation rate and
unemployment rate in contemporary democratic states, using Spearman’s ƍ correlation
coefficient. We apply this method in Albania during the period January 2005-December
2014. Some results of the study include:
The Central Limit Theorem is not applicable for the quarterly inflation rate as well as
for quarterly unemployment rate in Albania during the period January 2005-December
2014 at the confidence level 99.99%. The official data for inflation and unemployment
contradict the CLT at very high confidence level 99.99%.
The inflation process in Albania during the period January 2005-December 2014 is an
unfair game at the confidence level 99.2%.
The unemployment process in Albania during the period January 2005-December 2014
is an unfair game at the confidence level 99.99%.
The inflation and unemployment in Albania during the period January 2005-December
2014 are statistically dependent at the 96% confidence level.
Spearman’s correlation coefficient ƍ= 0.387 indicates a weak positive correlation
between inflation and unemployment in Albania during the specified period.
The official data for inflation and unemployment in Albania during the period January
2005- December 2014 are consistent with Friedman’s hypothesis.
