The Relationship Between Unemployment and Inflation in Albania

Abstract

This master thesis is aiming to analyze the relation between unemployment and inflation in Albania. This relation is described by the economist A.W. Philips who claims to have a reverse relation between them. If the Philips curve is applied even in Albania is still to be seen. For that reason this paper firstly analyzes the characteristics and trend of unemployment and then the trend of inflation in Albania. In the end the relation between the two of them is studied. The data for unemployment and inflation are taken from official sources, such as the statistics of INSTAT and World Bank for a period of ten years from 2000 to 2010. In this thesis the relationship between the unemployment (IV) and the inflation (DV) is analyzed using the linear regression analysis. The relationship between these two variables is negative but weak. The analysis is carried out using the statistical program SPSS.