The exercise consists in proposing a model of macroeconomic management for the Portuguese economy. To do this, we have data sources for the period 2000-2003.
This model should be implemented for a lower unemployment rate. It was however not clear whether this decline would be relative or absolute. Finally, the notion of time lag is neglected here which requires a change of variable acts immediately, on related variables.
Indeed, knowledge or prejudices relating to Portugal are not interfering with the reasoning: it progresses from a strictly economic standpoint. Thus, the social and political consequences will be minimized.
However, in order to give credibility to the model, we will not use extravagant numbers and will extend into a plausible reality though, our analysis is static.
Tags: unemployment in Portugal, Portuguese economy, macroeconomic management of Portuguese economy
[...] It said that this form of unemployment is classical and can be a model for this study. For this explanation of unemployment, two studies stand out for reference purposes and for models of control. However we will confirm these definitions by pure economic reasoning. Economic reasoning prior to the development of management models Let the premise be that "the rising employment rate reduces the rate of unemployment", and begin by examining the GDP as follows: GDP = population x rate x activity x employment rate x hours of work x productivity per hour x Here, we cannot include the population, labor force participation and working hours (variables are equal). [...]
[...] This formula will solve the problem of cyclical unemployment which arises from the decline in demand for finished products (in the case of Portugal). Companies cannot sell their products when it would cost more to hire people to produce them. They will need to cut costs by reducing their production capacity as well as their workforce. Consequently, the labor's demand for real wages is greater than the supply. Therefore, the solution is to stimulate demand for products that are required for household consumption and government consumption. [...]
[...] Therefore, it is the demand for finished goods (household consumption + Government consumption) to be privileged. It is on this statement that we will build our model. Let us now take a closer look at productivity. From formula we can say that increasing productivity creates wealth when everything else remains the same. On the other hand, firms operate a trade-off between productive capacity (machines) and productivity (men). Consequently, the increase in productivity will lead to a growth in the number of employees (employment rate) if the variables are favorable for hiring (waged, CSU etc.) GDP will grow so much faster than productivity according to expression The basic claim has been verified, the next step will be to find a steering model that will foster the productivity schedule rather than production capacity. [...]
[...] This model is aimed to reduce the level of unemployment. It is not clear whether this decline in unemployment is relative or absolute. The concept time lag will be neglected in this model. This concept is related to changing variables. This exercise involves considering the economic indicators that are available for this country. The knowledge or prejudices that are associated with Portugal must not interfere in the reasoning process. It must take place from a strictly economic standpoint and this will minimize the social and political consequences. [...]
[...] By phasing out these assumptions, they were able to identify three types of unemployment. The first phase is based on the lack of information for businesses and individuals and this has been called frictional unemployment. In this case, the balance between the supply and demand of employment (and station assignment and wage structure) is not perfect which leads to a residual amount of unemployment even in times employment is not difficult. So, factors that change the job market beforehand cannot be considered here. [...]
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