New study reveals link between unemployment and inflation during economic crises.
The article explores how economic curves in the euro area behaved during the world economic crisis. The researchers introduce a new concept called the 'modified output gap' based on two key curves. They show that the relationship between inflation and unemployment rates is a falling convex one. By combining these curves, they find a positive link between vacancy ratio and inflation rate. Through empirical analysis, they confirm the existence of these relationships during the crisis in eleven euro area countries.