An understanding of how GDP, unemployment and inflation interact and change across time and frequency
Yegnanew A. Shiferaw
The main aim of this paper is to examine the dynamic relationship between the three pillars of the economy: unemployment, inflation, and GDP in Ethiopia using the cross-wavelet transform (XWT) analysis, the multivariate Student-t generalized autoregressive score (GAS) model, and the autoregressive distributed lag (ARDL) model. The dynamics between the three indicators were also investigated using the Toda-Yamamoto (TY) causality test. The empirical findings from the XWT method suggest a relationship between unemployment, inflation, and GDP, though the relationship varies over time and frequency. The estimation results from the multivariate Student-t GAS model show that the correlation between unemployment (overall, male, female, and youth) and inflation is highly significant, indicating that the correlation is dynamic. A dynamic relationship exists between GDP and unemployment, except for females and young people. The ARDL approach's findings showed that unemployment significantly negatively impacted GDP. However, it was found that inflation significantly increased GDP. The general conclusion drawn from this study's findings is that unemployment significantly affects GDP and inflation. Therefore, the government should aggressively implement policies to reduce unemployment, especially youth unemployment. Additionally, the administration must rehabilitate the country's badly damaged economy and formalize a lasting cessation of hostilities between the federal government and the Tigray People's Liberation Front (TPLF).
Year of publication: |
2023
|
---|---|
Authors: | Shiferaw, Yegnanew A. |
Published in: |
Economies : open access journal. - Basel : MDPI, ISSN 2227-7099, ZDB-ID 2704214-5. - Vol. 11.2023, 5, Art.-No. 131, p. 1-15
|
Subject: | Gross Domestic Product | generalized autoregressive score model | inflation | time varying correlation | unemployment | cross-wavelet transform | Arbeitslosigkeit | Unemployment | Nationaleinkommen | National income | Inflation | Zeitreihenanalyse | Time series analysis | Bruttoinlandsprodukt | Gross domestic product | Theorie | Theory | Korrelation | Correlation | Phillips-Kurve | Phillips curve | Schätzung | Estimation |
Saved in:
freely available
Saved in favorites
Similar items by subject
-
Hahn, Franz R., (1996)
-
Hahn, Franz R., (1996)
-
Joint smoothing of GDP and unemployment with a bivariate HP filter
Islas-Camargo, Alejandro, (2019)
- More ...
Similar items by person
-
Multivariate analysis of East African currency exchange rate dynamics
Shiferaw, Yegnanew A., (2019)
- More ...