Inflation and Unemployment in Pakistan: An Empirical Analysis
Abstract
This empirical study has mainly examined the association between inflation and unemployment in Pakistan. The study has used the time series data from 1991 to 2015 and Eviews9 software to examine the existence of Philips Curve in the economy. The empirical results of study reveal that inflation was higher in 90’s era and simultaneously declining unemployment trend was observed. From 2001 to 2005 inflation rate was showing decreasing trend whereas unemployment was showing increasing trend. The upward tendency of inflation was recorded during 2005 to 2010. At the same time unemployment rate was showing declining trend. Increased inflation results into decreased unemployment rate which ultimately increase employment opportunity in the country. As demand for labor increased due to increase in employment opportunities, results increase in wage rate which is paid by producer to their labor. It causes to increase cost of production of goods which leads to inflation. This research paper is an observed support in existence of Phillips curve in Pakistan
Authors
Dr. Ghulam Muhammad Mangnejo
Assistant Professor, Department of Economics, Shaikh Ayaz University, Shikarpur, Sindh, Pakistan
Saqib Wahab Mahar
Assistant Professor, Department of Business Administration, Shaikh Ayaz University, Shikarpur Sindh, Pakistan
Bakhtiar Ahmed
Assistant Professor, Department of Pakistan Studies, Shaikh Ayaz University, Shikarpur Sindh, Pakistan