Open AccessCausal Linkage between Inflation and Unemployment: An evidence from the Selected MENA Countries
Author(s) -
Tarek Kacemi,
Sallahuddin Hassan
Publication year - 2018
Publication title -
pakistan journal of humanities and social sciences
Language(s) - English
Resource type - Journals
eISSN - 2709-801X
pISSN - 2415-007X
DOI - 10.52131/pjhss.2018.0601.0037
Subject(s) - granger causality , causality (physics) , economics , inflation (cosmology) , unemployment , econometrics , linkage (software) , panel data , phillips curve , macroeconomics , monetary economics , biology , biochemistry , physics , quantum mechanics , theoretical physics , gene
The current study measures the causal association between inflation and unemployment employing Phillips Curve approach from 1990 until 2016 for selected MENA countries. Granger causality and the heterogeneous causality methods for Panel are employed by this study as proposed by Dumitrescu and Hurlin. This causality test has an advantage over the panel Granger causality as it considers two dimensions of heterogeneity. The finding revealed a unidirectional causality between unemployment and inflation with Panel Dumitrescu and Hurlin Granger causality but not in the panel Granger causality test. Therefore, the governments should choose to stabilize inflation rate or reduce unemployment rate.