Study of Relationship Between Inflation, Unemployment

This study examines the relationship between inflation and unemployment with robbery in Iran during the period 1986-2006. To that end, misery index is calculated based on the sum of the unemployment rate and inflation rate. Next, nonlinear logistic smooth transition regression (LSTR) models are used, which allows for regime changes. The results show some evidence of threshold behavior in the relationship between the misery index and the growth rate of robbery in Iran; such that, there is a threshold level of the growth rate of robbery which beyond that the relationship between these variables changes. There is a positive relationship between misery index and robbery in both regimes; however, the impact of the misery index on robbery in the first regime is higher.