Effect of Inflation and Unemployment on Economic Growth in Pakistan

Abstract

This study found the impact of inflation and unemployment on economic growth in Pakistan. The time series data used for the time period of 1980 to 2010 which is collected from world data bank. The unit root ADF and philliperron shows that economic growth is stationary on level as well as 1^st difference but unemployment and inflation are stationary on 1^st difference. The ARDL result shows that there is a long run relationship between the variable. Furthermore, the results of White Heteroskedasticity, Ramsey reset and Breusch-Godfrey Serial Correlation LM test shows that there is no problem of heteroskedasticity, misspecification of model and serial correlation respectively.

Keywords: Inflation, Unemployment, Economic Growth.