Inflation, Unemployment and NAIRU Estimate in Indonesia: Phillips Curve Approach Cover Image

Inflation, Unemployment and NAIRU Estimate in Indonesia: Phillips Curve Approach
Inflation, Unemployment and NAIRU Estimate in Indonesia: Phillips Curve Approach

Author(s): Nurul Hafnati, Sofyan Syahnur
Subject(s): Labor relations, Socio-Economic Research
Published by: Institut ekonomskih nauka
Keywords: Inflation; Unemployment; Phillips Curve; NAIRU; Vector Error Correction Model

Summary/Abstract: The present study was carried out to analyze the relationship between inflation and unemployment in NAIRU estimate in Indonesia through Phillips curve approach during 25 years data from 1991-2016. The analysis model used in this research was Vector Error Correction Model (VECM) as attempts to determine the long run and short run relationships between inflation and unemployment matters in Indonesia. The results of Granger causality test indicated two-way relationship between inflation and unemployment in Indonesia. The formulated resultsonlong run estimate pointed out that unemployment delivered negative and significant effects on inflation. Nonetheless, Wald Test designated that there was a short run relationship between inflation and unemployment.

  • Issue Year: 51/2018
  • Issue No: 3-4
  • Page Range: 24-32
  • Page Count: 9
  • Language: English