Relationship between unemployment and inflation in pakistan 2015

relationship between unemployment and inflation in pakistan 2015

August Gazimağusa negative relationship between inflation and unemployment rates in Nigeria. Keywords: growth rates in Pakistan. By using . is based on secondary data for the period of to The relationship between inflation and unemployment was first introduced by William Phillips in . The empirical results show that the Phillips curve holds in Pakistan. Similarly. This research paper empirically examines the relationship between the monetary inflation." This implies the unemployment issue is 70 for every penny more to , we watched that inflation development in Pakistan has been cyclic.

Land reforms, the consolidation of holdings, and strict measures against hoarding were combined with rural credit programs and work programs, higher procurement prices, augmented allocations for agriculture, and improved seeds as part of the green revolution.

relationship between unemployment and inflation in pakistan 2015

Tax collection was low, averaging less than 10 percent of GDP. Bonus vouchers facilitated access to foreign exchange for imports of industrial machinery and raw materials. Tax concessions were also offered for investment in less-developed areas. These measures had important consequences in bringing industry to Punjab and gave rise to a new class of small industrialists. The united government of Pakistan expanded its cultivated area and some irrigation facilities, but the rural population generally became poorer between and because improvements did not keep pace with the rural population increase.

Nationalization and command economy[ edit ] Tarbela Damthe largest earth filled dam in the world, was constructed in Prime Minister Secretariat in the new capital city Spread over acres, Quaid-i-Azam University was constructed in Pakistan Steel Mills was constructed inmaking it the largest industrial mega-corporation, having a production capacity of 5.

Economic mismanagement in general, and fiscally imprudent economic policies in particular, caused a large increase in the country's public debt and led to slower growth in the s.

relationship between unemployment and inflation in pakistan 2015

Two wars with India - the Second Kashmir War in and the Bangladesh Liberation War in - and the resultant separation of Bangladesh from Pakistan also adversely affected economic growth. Large generous aid from the United States also declined after the global oil crisis inwhich had a further negative impact on the economy.

The first phase started soon after the PPP came into power and was motivated by distributional concerns — to bring under state control the financial and physical capital controlled by a tiny corporate elite.

However, inthe influence and authority of the left wing within the party significantly decreased: Corruption grew exponentially and access to state corridors became a primary avenue of accumulating a private fortune.

In this way, groups and individuals in command of state institutions used public intervention in the economy "as a means for extending their wealth and power.

relationship between unemployment and inflation in pakistan 2015

Major heavy mechanical, chemical, and electrical engineering industries were immediately nationalized, as were banks, insurance companies, educational institutions, and other private organizations.

Industries such as KESC were now under complete government control. Bhutto abandoned Ayub Khan's state capitalism policies, and introduced socialist policies in a move to reduce the rich get richer and poor get poorer ratio.

However, economic growth slowed in the wake of nationalization, with growth rates falling from an average of 6. The main objective of the study was to the sole aim of find out whether higher inflation could lead to Using the Johansen cointegration test and the Granger employment creation. The findings reveal that a positive causality test, Hussein investigated a trade-off long run relationship between employment and output, relationship exists between unemployment and inflation which supports the claim that anything that negatively in the Jordan between and The result showed effects output such as high inflationwill by extension there was no causal relationship between inflation rate impair employment creation.

In the short-run, it was and unemployment in Jordan within the period covered found that the relationship between inflation and by the study, indicating that no trade-off relationship employment creation was not significant. Qin and Wang argue that the Phillips curve is Gur used panel data analysis in examining the ineffective in determining the causal relationship factors that affect unemployment in the BRIC countries between unemployment and inflation in China.

This was Brazil, Russia, India and China from to It was stresses that the non-applicability of the industrial product growth are among the factors that lead Phillips curve on the communist state was as a result of to reduction in unemployment level. Thayaparan contends that for the case of Sri Similarly, the findings of Umoru and Anyiwe Lanka, only inflation has a significant effect in reducing opposed the Phillips curve position on inflation- unemployment while the gross domestic product exerts unemployment relation.

The study assessed the positive but non-significant positively influences on dynamics of inflation and unemployment in Nigeria over unemployment.

The study which examined the effect of a twenty seven years period, using the Vector Error inflation and economic growth on unemployment in Sri Correction Technique. Evidence of stagflation was Lanka within the period and also established found in the Nigerian economy within the period a unidirectional causality between inflation and covered by the study.

But Nitzan in his paper, unemployment, and bidirectional causal relationships macroeconomic perspective of unemployment and between unemployment and gross domestic product; and inflation stresses that though some factors like between inflation and gross domestic product in Sri stagflation may have posed serious challenge to the Lanka. Phillps curve, such contention only modifies and do not nullify the hypotheses.

He stated that in inverse relation Orji, Orji and Okafor examined the inflation and between inflation and unemployment is too significant unemployment connection in Nigeria with the aim of finding out if the original Phillips curve proposition International Journal of Scientific Research in Science and Technology www.

The result revealed that Kogid, et al examined the trade-off relationship unemployment is a major determinant of inflation and between unemployment and inflation in Malaysia using that there is a positive relationship between inflation and ARDL bounds testing to cointegration, ECM based unemployment rate in Nigeria.

The study showed the existence invalidated the Phillips curve hypothesis in Nigeria.

relationship between unemployment and inflation in pakistan 2015

On of the long-run relationship between inflation and the contrary, Resurreccion evaluated the linkage unemployment, and revealed unidirectional causal between unemployment, inflation and economic growth relationship running from inflation to unemployment, in Phillipines for the period to It was shown which points to the fact that inflation influenced that unemployment has indirect relationship with unemployment. This study eventually found that there is inflation and economic growth.

Similarly, Furuoka and Munir argue that the Phillips curve hypothesis holds in the Malaysian Umaru and Zubairu investigated the relationship economy.

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In the study, the Error Correction model between unemployment and inflation in the Nigerian ECM to analyse the relation between unemployment economy within the period and The results and inflation in Malaysia. The results indicate there is indicate that inflation has negative impact on long-run equilibrium relationship between the two unemployment.

The Granger causality test revealed that variables, and also found an inverse relationship there is no causal link between unemployment and between unemployment and inflation in Malaysia inflation in Nigeria during the period of study. Johansen thereby supporting the validity of the original cointegration test showed that a long-run relationship proposition of the Phillips curve. Umaru, Donga and Musa employed the Johansen B. Data and Methodology cointegration and the Granger causality test to investigate the effect of unemployment and inflation on Research design for this study is ex post-facto which economic growth in Nigeria from to The entails that the event we are studying indeed taken place results of Causality suggest that unemployment and already.

We are therefore using secondary data sourced inflation are causal for real GDP and not real GDP is not from World Bank National account data files and the causal for unemployment and inflation. Variables of interest is a one-way causality running from unemployment and include the unemployment rate, inflation rate, money inflation to real GDP.

The Johansen cointegration tests stock and exchange rate. This study covers the period confirm the existence of long run relationship between to Because our study period is long-term and economic growth, unemployment and inflation. The we are using time series data, there is therefore the need results also showed that unemployment and inflation to ensure that our data is stationary before we subject exert a positive impact on economic growth.

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This measure will ensure that in the end our result will not be spurious Aurangzeb and Asif examined the hence reliable. The Augmented Dickey-Fuller ADF macroeconomic determinants of the unemployment for unit root test will be used to ascertain if our variables are India, China and Pakistan for the period tostationary or not. Further techniques of analysis using the Johansen cointegration, Granger causality test employed to evaluate the linkage between and regression analysis. The result of granger causality unemployment and inflation are the Johansen co- indicates that bidirectional causality does not exist integration test, Error Correction Model ECM.

Cointegration result revealed that Model Specification long term relationship does exist among the three variables for all the models. This study is patterned after Furuoka and Munir which examine inflation-unemployment relation in International Journal of Scientific Research in Science and Technology www. The model adopted by the authors is of the Table 1. We modified the above model to arrive at our baseline equation, which accommodates our peculiar variables.

We represent our distinct model thus: Authors There are three stages to our estimation. First we test our Table 2.

relationship between unemployment and inflation in pakistan 2015

Unit root test at level variables for stationarity using the Phillip-Perron unit root test. Time-series data is stationary if its mean and variance are constant over time Gujarati, The Phillip-Perron is based on the following model: If the variables are stationary The result of the unit test as presented in the table 4.

However, if our variables are integrated of stationary at level. This however will take us to the next step order one, 1 1we will have the justification to run the in ADF approach which requires differencing of the variables Johansen co-integration test.

This second stage enables us find out if long run relationship Table 3. Unit root test at first difference exist among the variables. If at this point our variables are co- integrated, we then move on to the third stage where we the run the Error Correction model ECM by modifying our baseline equation thus: Authors Eviews result Table 4.

This result now allows us to run the Johansen coinegration test to establish if the variables move along together in the long-run. Graphical representations of proxied variables International Journal of Scientific Research in Science and Technology www. The trace statistic revealed this long run long and the short run.

Economic history of Pakistan

The implication is that unemployment, inflation, money stock and IV. Researchers and Table 5. Error Correction Model ECM Results economists pick on the subject since unemployment remains one of the greatest challenges facing the developing and Variable Coefficient Std. Other things being equal, C 0. However, finding the perfect ECT -1 Eview result globe contend to achieve high level of employment without The result of the short run dynamics model as represented in sacrificing price level stability.

Hence in this study we attempt table 4. EXR has a positive and price level in Nigeria using annualized data from to significant effect on the UER in the short run. In other words The results of the findings show that inflation impact it also shows that in the short run INFRT has a negative and negatively on unemployment while money supply and statistically insignificant impact on the UER in Nigeria. The exchange rate were found to have positive influence on error correction term ECT demonstrates the speed of unemployment.

Although unemployment and inflation have adjustment to long-run equilibrium. ECT is negative and long-run association, there is divergence along the equilibrium significant, and the coefficient value of