IMPACT OF UNEMPLOYMENT AND INFLATION ON ECONOMIC GROWTH: EVIDENCE FROM SELECTED ASEAN COUNTRIES

Fatma Azwa, Salleh (2022) IMPACT OF UNEMPLOYMENT AND INFLATION ON ECONOMIC GROWTH: EVIDENCE FROM SELECTED ASEAN COUNTRIES. [Final Year Project Report] (Unpublished)

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Abstract

The study aimed to examine the impact and relationship between unemployment and inflation on the economy in selected Association of Southeast Asian Nations (ASEAN) countries, Indonesia, Thailand, and Philippines. The study data covered from 1991 to 2020, giving about 90 observations in total. There are five statistical tests have been applied in this study which includes Panel Unit Root tests, namely Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) test to examine the stationary of the data; Pedroni Cointegration test to test the long-run relationship among variables; Pool Mean Group (PMG) or AR Distributes Lags (ARDL) test to identify the short-run and long-run impact of the variables; and Granger Causality test to test the causality between the variables. The findings show that the data were stationary at the first and second difference, and a long relationship occurs between the sets of variables. Besides that, unemployment positively affects Gross Domestic Product (GDP), while inflation negatively affects GDP. Between GDP and unemployment, there is no relationship exists. However, a unidirectional relationship occurs from GDP to inflation, and a bidirectional relationship occurs from inflation to unemployment.

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