The Impact of CPI and Unemployment Rate on Economic Growth: Based on TVP-VAR Model

Abstract

Inflation has a significant impact on economic growth and monetary policy. In recent times, the US economy is facing the threat of high inflation, and the Federal Reserve has been continuously adopting interest rate hikes, which have an impact on the economy and finance. And the relationship between inflation and unemployment rate is a trade-off, so this article studies the impact of CPI and unemployment rate on the US economy. This artic le uses the US CPI and unemployment rate from 1948 to 2009 to construct a VAR model, predicts the final ten periods, and compares them with actual values. Using US CPI, unemployment rate, and GDP data from 1948 to 2009, construct a TVP-VAR model to analyze the impact of inflation and unemployment rate on economic growth.