An empirical estimation of the relationship between Edmund Phelpsʹ "investment driving forces" and the unemployment rate

On his invited lecture at Beijing University, China, December 2004, Edmund S. Phelps, the winner of the 2006 Nobel Prize in Economics, proposed four indicators of "investment driving forces", which could be used in measuring the economic growth of a countryʹs performance, and which might in turn also be eventually reflected in the countryʹs employment situation. In addition to Edmund Phelpsʹ four indicators, such as (1) the rate of changes of investment, (2) the rate of changes of foreign exchange (that is, forex) rate, (3) the rate of changes of employeesʹ wage incomes as a proportion of GDP, and (4) the rate of changes of the market values of listed stocks as a proportion of GDP, authors suggested two more indicators (5) the severity of market values of fraud companies, and (6) the overdue rate of overall financial institutions. Through the application of regression analysis methodology, this paper will make an empirical estimation, based on Taiwanese historical investment data, on the relationship among "investment driving forces" and countryʹs economic performance in terms of unemployment rate.