Impact of Inflation and Unemployment on Economic Growth of Pakistan
##plugins.themes.bootstrap3.article.main##
This paper aims to identify the influence of inflation and unemployment on the economic growth of the country. This study recommends some essential policies about unemployment and inflation in the economic growth of Pakistan. In this study, the “Ordinary Least Square (OLS)” method is used with different diagnostic tests for determining the fitness of data for the investigation; and the data is collected from 1980 to 2018. The econometric results suggest that the time series is stationary because the values of t-statistic are more than t-tab and sig value is also significant. The error term on ADF is significant and that ensures that there is long term association. The results of ECM indicate that inflation and unemployment are away from the value of equilibrium. The results of multiple linear regression models indicate that inflation and unemployment are statistically insignificant, and the overall model is also statistically insignificant. There is no multicollinearity and there is no heteroscedasticity as per White test. By running the Ramsay Reset test, the researcher concludes that the model is not specified because the sig value of the t-test and f-test is significant.
Downloads
References
-
Arshad, S., & Ali, A. (2016). Trade-off between Inflation, Interest and Unemployment Rate of Pakistan: Revisited.
Google Scholar
1
-
Ayyoub, M., Chaudhry, I. S., & Farooq, F. (2011). Does Inflation Affect Economic Growth? The case of Pakistan. Pakistan Journal of Social Sciences (PJSS), 31(1).
Google Scholar
2
-
Chaudhary, M. and Ahmad, N. (1995). Money Supply, Deficit and Inflation in Pakistan. Pakistan Development Review, 34, pp. 945-956.
Google Scholar
3
-
Gandelman, N., & Hernández-Murillo, R. (2009). The impact of inflation and unemployment on subjective personal and country evaluations. Federal Reserve Bank of St. Louis Review, 91(3), 107-26.
Google Scholar
4
-
Gujarati, D. N. (2009). Basic econometrics. Tata McGraw-Hill Education.
Google Scholar
5
-
Hussain, T., Siddiqi, M. W., & Iqbal, A. (2010). A Coherent Relationship between Economic Growth and Unemployment: An Empirical Evidence from Pakistan. International Journal of Human and Social Sciences, 5(5), 332-339
Google Scholar
6
-
Jaradat, M. A., & Al-Hhosban, S. A. (2014). Relationship and Causality between Interest Rate and Inflation Rate Case of Jordan. Interdisciplinary of Contemporary Research Business, 6(4), 54-65.
Google Scholar
7
-
Muhammad AA, Saidu BM, Nwokobia OJ, Yakubu KM (2013) Effect of unemployment and inflation on wages in Nigeria. J Emerg Trends Econ Manag Sci, 4(2):181–188.
Google Scholar
8
-
Nelson, C. R., & Plosser, C. R. (1982). Trends and random walks in macroeconmic time series: some evidence and implications. Journal of monetary economics, 10(2), 139-162.
Google Scholar
9
-
Phillips, A. W. (1958). The relation between unemployment and the Rate of change of money wage rates in the United Kingdom, 1861–1957 1. Economica, 25(100), 283-299.
Google Scholar
10
-
Rashid, A. and Kernal, A. (1997). Macroeconomic Policies and their Impact on Poverty alleviation in Pakistan. The Pakistan Development Review, vol.36 (no.1), pp.39-68.
Google Scholar
11
-
Sargan, J. D., & Bhargava, A. (1983). Testing residuals from least squares regression for being generated by the Gaussian random walk. Econometrica: Journal of the Econometric Society, 153-174.
Google Scholar
12
-
Shahid, M. (2014). Effect of inflation and unemployment on economic growth in Pakistan. Journal of economics and sustainable development, 5(15), 103-106.
Google Scholar
13
-
Umair, M., & Ullah, R. (2013). Impact of GDP and inflation on unemployment rate: A study of Pakistan economy in 2000-2010. International Review of Management and Business Research, 2(2), 388.
Google Scholar
14
-
Umaru, A., & Zubairu, A. A. (2012). Effect of inflation on the growth and development of the Nigerian economy (An empirical analysis). International Journal of Business and Social Science, 3(10).
Google Scholar
15