The Impact of Inflation on Unemployment to the Extent of Pakistan

Abstract

This work studies the association between Unemployment Rate (UR) and Inflation Rate (IR) for Pakistan for the span of 1973 to 2014. OLS and ECM is employed to investigative the empirical association between the UR and rate of inflation. Outcomes of this study disclose that there is strong, indirect and significant association found between UR and IR. As this is important finding for Pakistani perspective since both have strong trade-off.

Keywords: Inflation, Error correction model, Inflation, Long Run, Philips Curve, Short run, Unemployment.

JEL Code: E31, P24, E24, J64.