Revista Tinerilor Economiºti (The Young Economists Journal)

Economic Theories – International Economic Relations
Employment, Interest and Money” (1936), shows that a key contributor to employment
growth is the growth of domestic demand [4]. UNCTAD specialists in „The Trade and
Development Report 2010-Employment, globalization and development” [9] highlight
that generally, in developed countries employment cycles are very closely associated with
output growth cycles: employment growth is typically associated with growth of
aggregate demand and output. Moreover, it is shown that in developing countries, the
direct relationship between employment and aggregate demand is less pronounced than in
developed countries.
Statistical data [11] show that some countries such as Germany, USA and the
emerging countries in Asia managed to get out of the current crisis and to reduce
unemployment by obtaining an economic growth based on the growth of domestic demand.
Currently there is the opinion [9] according to which in order to create
employment and combat poverty a sustained expansion of domestic demand growth
through increasing mass purchasing power and through spurring fixed investments and
technological innovation is needed.
2. Objectives and methodology
In order to highlight the implications of aggregate demand on employment in
the Romanian economy, in the last two decades, we aim to analyse, in the first part of
the paper, the evolution of the elements that make up aggregate demand (final
consumption, investments and net export) and their relationship with employment, and
in the second part we aim to emphasise the simultaneous influence of the components
of aggregate demand on the employed population by means of a multi-factor
econometric model.
In order to reach our objectives the methodology used was, preponderantly, the
statistical one (descriptive methods), this being used in order to process, analyse and
interpret statistical data regarding final consumption, investments, net export, civil
employment, gross domestic product (GDP).
The analysis has been carried out for a period of 20 years (1990-2009), based on
the statistical information from the Romanian Statistical Yearbook, The Annual NBR
(National Bank of Romania) Report etc. Due to the fact that during the mentioned period,
considerable increases in the prices of commodities and production factors took place, so
as to emphasise the real evolution of the analysed macroeconomic variables we will
eliminate the influence of prices on aggregate demand and supply, expressing them in
comparable prices (1990).
In order to study the intensity, meaning and shape of the relationship between the
components of aggregate demand and between these and employment, for Romania
between 1990 and 2009, we applied the Pearson correlation coefficient. In statistics, the
value of the correlation coefficient varies between +1 and -1. The coefficient result is
situated between -1 and +1. If the result belongs to the interval [-1;0), then it shows a
negative relation between the two analysed indicators. If the result belongs to the
interval (0;+1] there is a direct relationship between the two indicators. The closer the
result is to -1, respectively to +1, the higher the connection intensity is.
In order to highlight the simultaneous influence of the components of aggregate
demand on employment, in Romania, we used the linear regression analysis. Having
the statistical data on the elements of aggregate demand as starting point, we will create
a multi-factor, unisectoral econometric model with synchronous influences made up of
a single equation, designed for the stimulation of the civil employed population
133