Investigation of the Lucas Loss Functioning during the Period 2000-2012 in Albania

Abstract

The main objective of the study is to investigate the Lucas loss function as well as the Okun misery index over the period January 2000-June 2012 in Albania. Some results of the study include:The Central Limit Theorem is not valid for the quarterly economic loss in the sense of R. E. Lucas, Jr. during the specified period in Albania, at a confidence level 90.5%.The quarterly economic loss caused by inflation and unemployment during the specified period in Albania is an unfair game, at the confidence level 99.9%.The quarterly Okun misery index during the specified period in Albania is an unfair game, at the confidence level 94.2%.In average, the Albanian people would trade off a 1 percent increase in the unemployment rate for a 2.35 percent increase in the inflation rate. The famous “Okun misery index” under-weights the economic loss of the Albanian people caused by joblessness.

DOI: 10.5901/ajis.2014.v3n4p127