  Using an analog of the boundary element method in engineering and science, we
analyze and model unemployment rate in Austria, Italy, the Netherlands, Sweden,
Switzerland, and the United States as a function of inflation and the change in
labor force. Originally, the model linking unemployment to inflation and labor
force was developed and successfully tested for Austria, Canada, France,
Germany, Japan, and the United States. Autoregressive properties of neither of
these variables are used to predict their evolution. In this sense, the model
is a self-consistent and completely deterministic one without any stochastic
component (external shocks) except that associated with measurement errors and
changes in measurement units. Nevertheless, the model explains between 65% and
95% of the variability in unemployment and inflation. For Italy, the rate of
unemployment is predicted at a time horizon of nine years with pseudo
out-of-sample root-mean-square forecasting error of 0.55% for the period
between 1973 and 2006. One can expect that the u nemployment will be growing
since 2008 and will reach 11.4% near 2012. After 2012, unemployment in Italy
will start to descend.
