The Causality Between Inflation and Unemployment: The Indonesian Evidence
The Causality Between Inflation and Unemployment: The Indonesian Evidence
Author(s): Gatot Sasongko, Andrian Dolfriandra HurutaSubject(s): National Economy, Economic history, Labor relations, Economic development, Fiscal Politics / Budgeting
Published by: Vilnius Gediminas Technical University
Keywords: granger causality; inflation; unemployment; vector autoregression;
Summary/Abstract: Two closely watched indicators of economic performance are inflation and unemployment. This study empirically analyzes the causality between inflation and unemployment in Indonesia during 1984 to 2017. The data were gathered from the Indonesian Central Bureau of Statistics. Methodologically, this study employed the Granger Causality test and Vector Autoregression to determine the causality between inflation and unemployment. The results show that there is a one-way causality between inflation and unemployment. The findings imply that unemployment causes inflation, but not vice versa. Next inflation and unemployment are also closely related to other determining factors, such as season, household income, and the decisions to attend school or to perform the housekeeping.
Journal: Verslas: teorija ir praktika
- Issue Year: 20/2019
- Issue No: 1
- Page Range: 1-10
- Page Count: 10
- Language: English
