Open AccessInflation dynamics analysis in 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.2018.0602.0040
Subject(s) - phillips curve , economics , unemployment , inflation (cosmology) , context (archaeology) , keynesian economics , econometrics , linkage (software) , new keynesian economics , macroeconomics , monetary policy , paleontology , biochemistry , chemistry , physics , biology , theoretical physics , gene
The current paper analyses the new Keynesian Phillips curve (NKPC) in the context of selected MENA countries over the 1990-2016 period. This study has used Pooled Mean Group (PMG) and Fully Modified Ordinary Least Square (FMOLS) estimation methods for the empirical analysis. For the dynamic heterogeneous panels, PMG developed by Pesaran et al. (1999) is the most suitable technique. The outcomes by FMOLS asserted that inflation and unemployment are unrelated in the long run, corroborating the long run Philips Curve theory. While, the empirical outcomes obtained by PMG indicate negative linkage between unemployment and inflation in the long run. Nevertheless, the notion of the tradeoff between the inflation and unemployment that expressed by a short-run Phillips curve is not observed in the selected MENA countries. The findings of this study corroborate the hybrid version of NKPC. Moreover, it establishes of the study suggest that the dynamic inflation can be used as a HNKPC model for understanding the inflation behavior in selected MENA countries.