Testing Phillips Curve In Pakistan
DOI:
https://doi.org/10.31580/jpvai.v3i3.1515Keywords:
Phillips Curve, Inflation Rate, Unemployment Rate, Gross Domestic ProductAbstract
Pakistan has usually faced a high inflation rate along with the high unemployment rate since its inception. In every discussion of inflation and unemployment, one cannot ignore the contribution of Dr. Alban William Housego Phillips. Dr. A. W Phillips has done a remarkable contribution in the field of economics with his popular theory known as The Phillips Curve. Empirical Literature of Pakistan has a good portion of researches on inflation rate and unemployment rate discretely, but very few researches focus to find out the exhibition of Phillips Curve in the economy. Therefore, this study aims to find out the impact of inflation on the unemployment rate and growth rate of the gross domestic product of Pakistan.
As the aforementioned statement suggests, the independent variable of the study is inflation rate while the dependent variables are unemployment rate and growth rate of gross domestic product. The data range selected was of 20 years that is from 1991-92 to 2019-20. Results were extracted by using three test of EViews software that are, Augmented Dickey-Fuller test, Granger Cointegration Test, and Johansen Cointegration Test. Findings showed that there is an impact of inflation rate on unemployment rate and gross domestic product growth rate of Pakistan. In short, there can be seen a reflection of Phillips Curve in Pakistan.
References
Abu, N. (2019) Inflation and Unemployment Trade-off: A Re-examination of the Phillips Curve and its Stability in Nigeria. Contemporary Economics, Vol 13 (1).
Furuoka, F., Munir, Q. (2009) "Phillips Curve" in selected ASEAN countries: new evidence from panel data analysis. Sunway Academic Journal, Vol 6, 89-102.
Gul, H., Mughal, K., Kakar, GA., Hussain, A., Khaliq, S. (2012) Revisiting of Philips Curve; a Case Study from Pakistan. International journal of business and behavioral science, Vol 2(6), 53-78.
Mangnejo, GM., Mahar, SW., Ahmed, B. (2020). Inflation and Unemployment in Pakistan: An Empirical Analysis. Pakistan Social Sciences Review, Vol 4(2), 306-318.
OECD (2010), National Accounts at a Glance 2009, OECD Publishing, Paris, https://doi.org/10.1787/9789264067981-en.
Nurul, M., (2018). Testing Phillips curve to examine the inflation rate regarding unemployment rate, annual wage rate and GDP of Philippines: 1950-2017. Academy of Accounting and Financial Studies Journal, Vol-22 (5).
Zayed, NM., Islam, MDR., Hasan, K. (2018). Testing Phillips curve to examine the inflation rate regarding unemployment rate, annual wage rate and GDP of Philippines: 1950-2017. Academy of Accounting and Financial Studies Journal, Vol 22(5).
Zulfiqar, E. (2014). Is there a Phillips curve in Pakistan? A time series analysis. School of Economics.
