Measuring the Causal Relationship Between Inflation and Unemployment in Iraq using the Phillips Curve for the Period (2004-2021)
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Abstract
This study aims to analyze and measure the causal relationship between the inflation rate and the unemployment rate in Iraq for the period during (2004-2021) using the Phillips curve methodology in analyzing the causal relationship between inflation and unemployment rates. The theoretical and applied importance of the study can be reviewed, which stems from the extent of the need for all countries to address the problems of Macroeconomic, represented primarily by the problems of unemployment and inflation. As the Iraqi economy, like other countries, suffers from high rates of inflation and unemployment, and from their many negative effects, whether economically or socially. As we find that there are many intertwined factors behind these two problems. This led to many risks that affected the individual and society, which in turn led to a waste of Iraq’s economic and human potential. Therefore, these two problems must be addressed quickly in order to reduce their repercussions and their ongoing consequences. From this logic, our study came to answer the following question: Is there an inverse relationship between the unemployment rate and inflation in Iraq during the period (2004-2021)?
The study found that the low frequency of the inverse relationship between the inflation rate and the unemployment rate in Iraq for the period (2004-2021) indicates a relative separation in the effect between the change in inflation and unemployment, meaning that a decrease in the unemployment rate by (0.013%) on average is accompanied by an increase in the inflation rate. By 10%, while the correlation coefficient was calculated between the study variables and it was found that there is a direct relationship between them. If it is not possible to achieve the Phillips curve for the period (2004-2021) and the emergence of the so-called pure economic recession, as through this we have reached that there is a slight inverse relationship between the variables. But not for all years of study, and this is consistent with the theoretical aspect of the Phillips curve and what was proven by the mathematical analysis of the study.
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References
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