An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia

Takele Wogari

doi:doi:10.11648/j.ebm.20220806.11

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An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia

Takele Wogari

Published in European Business & Management (Volume 8, Issue 6)

Received: 11 October 2022 Accepted: 22 November 2022 Published: 9 January 2023

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Abstract

The study examined the impact of inflation and economic growth on unemployment Ethiopia; for the period 1991-2018. Cointegration test, Error Correction Model (ECM) technique and Granger causality test were employed in the analysis. The variables utilized in the investigation include real gross domestic product (RGDP), inflation rate and unemployment rate. Stationarity test was conducted and the results indicated that all the variables except LNUNMPL and LNED were stationary at level; however, LNUNMPL and LNED became stationary after first differencing. The cointegration test result revealed that long run relationship exists among the variables under study. More so, ECM result showed that RGDP and inflation has negative and significant impact on unemployment. Finally, the Granger causality results indicated unidirectional relationship between UNEMP and RGDP, as well as between unemployment and inflation with causality running from RGDP to UNEMP and from inflation to UNEMP Based on the findings above, the study therefore, recommends that government should as a matter of urgency create more employment opportunities to absorb the teeming population of the unemployed labour force in the country through modernization of the agricultural sector, bring in modern equipment in the facilities of agriculture to make the sector more attractive to all citizens despite one’s qualifications and profession, as that alone would go a long way in reducing unemployment level in the country.

Published in	European Business & Management (Volume 8, Issue 6)
DOI	10.11648/j.ebm.20220806.11
Page(s)	106-123
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Economic Growth, Unemployment, Cointegration, ARDL

References

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APA Style

Takele Wogari. (2023). An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. European Business & Management, 8(6), 106-123. https://doi.org/10.11648/j.ebm.20220806.11

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ACS Style

Takele Wogari. An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. Eur. Bus. Manag. 2023, 8(6), 106-123. doi: 10.11648/j.ebm.20220806.11

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AMA Style

Takele Wogari. An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. Eur Bus Manag. 2023;8(6):106-123. doi: 10.11648/j.ebm.20220806.11

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@article{10.11648/j.ebm.20220806.11,
  author = {Takele Wogari},
  title = {An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia},
  journal = {European Business & Management},
  volume = {8},
  number = {6},
  pages = {106-123},
  doi = {10.11648/j.ebm.20220806.11},
  url = {https://doi.org/10.11648/j.ebm.20220806.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20220806.11},
  abstract = {The study examined the impact of inflation and economic growth on unemployment Ethiopia; for the period 1991-2018. Cointegration test, Error Correction Model (ECM) technique and Granger causality test were employed in the analysis. The variables utilized in the investigation include real gross domestic product (RGDP), inflation rate and unemployment rate. Stationarity test was conducted and the results indicated that all the variables except LNUNMPL and LNED were stationary at level; however, LNUNMPL and LNED became stationary after first differencing. The cointegration test result revealed that long run relationship exists among the variables under study. More so, ECM result showed that RGDP and inflation has negative and significant impact on unemployment. Finally, the Granger causality results indicated unidirectional relationship between UNEMP and RGDP, as well as between unemployment and inflation with causality running from RGDP to UNEMP and from inflation to UNEMP Based on the findings above, the study therefore, recommends that government should as a matter of urgency create more employment opportunities to absorb the teeming population of the unemployed labour force in the country through modernization of the agricultural sector, bring in modern equipment in the facilities of agriculture to make the sector more attractive to all citizens despite one’s qualifications and profession, as that alone would go a long way in reducing unemployment level in the country.},
 year = {2023}
}

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TY  - JOUR
T1  - An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia
AU  - Takele Wogari
Y1  - 2023/01/09
PY  - 2023
N1  - https://doi.org/10.11648/j.ebm.20220806.11
DO  - 10.11648/j.ebm.20220806.11
T2  - European Business & Management
JF  - European Business & Management
JO  - European Business & Management
SP  - 106
EP  - 123
PB  - Science Publishing Group
SN  - 2575-5811
UR  - https://doi.org/10.11648/j.ebm.20220806.11
AB  - The study examined the impact of inflation and economic growth on unemployment Ethiopia; for the period 1991-2018. Cointegration test, Error Correction Model (ECM) technique and Granger causality test were employed in the analysis. The variables utilized in the investigation include real gross domestic product (RGDP), inflation rate and unemployment rate. Stationarity test was conducted and the results indicated that all the variables except LNUNMPL and LNED were stationary at level; however, LNUNMPL and LNED became stationary after first differencing. The cointegration test result revealed that long run relationship exists among the variables under study. More so, ECM result showed that RGDP and inflation has negative and significant impact on unemployment. Finally, the Granger causality results indicated unidirectional relationship between UNEMP and RGDP, as well as between unemployment and inflation with causality running from RGDP to UNEMP and from inflation to UNEMP Based on the findings above, the study therefore, recommends that government should as a matter of urgency create more employment opportunities to absorb the teeming population of the unemployed labour force in the country through modernization of the agricultural sector, bring in modern equipment in the facilities of agriculture to make the sector more attractive to all citizens despite one’s qualifications and profession, as that alone would go a long way in reducing unemployment level in the country.
VL  - 8
IS  - 6
ER  -

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Author Information

Takele Wogari

College of Business and Economics, Wollega University, Nekemte, Ethiopia

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Plain Text BibTeX RIS

APA Style

Takele Wogari. (2023). An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. European Business & Management, 8(6), 106-123. https://doi.org/10.11648/j.ebm.20220806.11

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ACS Style

Takele Wogari. An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. Eur. Bus. Manag. 2023, 8(6), 106-123. doi: 10.11648/j.ebm.20220806.11

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AMA Style

Takele Wogari. An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia. Eur Bus Manag. 2023;8(6):106-123. doi: 10.11648/j.ebm.20220806.11

Copy | Download

@article{10.11648/j.ebm.20220806.11,
  author = {Takele Wogari},
  title = {An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia},
  journal = {European Business & Management},
  volume = {8},
  number = {6},
  pages = {106-123},
  doi = {10.11648/j.ebm.20220806.11},
  url = {https://doi.org/10.11648/j.ebm.20220806.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20220806.11},
  abstract = {The study examined the impact of inflation and economic growth on unemployment Ethiopia; for the period 1991-2018. Cointegration test, Error Correction Model (ECM) technique and Granger causality test were employed in the analysis. The variables utilized in the investigation include real gross domestic product (RGDP), inflation rate and unemployment rate. Stationarity test was conducted and the results indicated that all the variables except LNUNMPL and LNED were stationary at level; however, LNUNMPL and LNED became stationary after first differencing. The cointegration test result revealed that long run relationship exists among the variables under study. More so, ECM result showed that RGDP and inflation has negative and significant impact on unemployment. Finally, the Granger causality results indicated unidirectional relationship between UNEMP and RGDP, as well as between unemployment and inflation with causality running from RGDP to UNEMP and from inflation to UNEMP Based on the findings above, the study therefore, recommends that government should as a matter of urgency create more employment opportunities to absorb the teeming population of the unemployed labour force in the country through modernization of the agricultural sector, bring in modern equipment in the facilities of agriculture to make the sector more attractive to all citizens despite one’s qualifications and profession, as that alone would go a long way in reducing unemployment level in the country.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - An Econometric Analysis of Impact of Inflation and Economic Growth on Unemployment in Ethiopia
AU  - Takele Wogari
Y1  - 2023/01/09
PY  - 2023
N1  - https://doi.org/10.11648/j.ebm.20220806.11
DO  - 10.11648/j.ebm.20220806.11
T2  - European Business & Management
JF  - European Business & Management
JO  - European Business & Management
SP  - 106
EP  - 123
PB  - Science Publishing Group
SN  - 2575-5811
UR  - https://doi.org/10.11648/j.ebm.20220806.11
AB  - The study examined the impact of inflation and economic growth on unemployment Ethiopia; for the period 1991-2018. Cointegration test, Error Correction Model (ECM) technique and Granger causality test were employed in the analysis. The variables utilized in the investigation include real gross domestic product (RGDP), inflation rate and unemployment rate. Stationarity test was conducted and the results indicated that all the variables except LNUNMPL and LNED were stationary at level; however, LNUNMPL and LNED became stationary after first differencing. The cointegration test result revealed that long run relationship exists among the variables under study. More so, ECM result showed that RGDP and inflation has negative and significant impact on unemployment. Finally, the Granger causality results indicated unidirectional relationship between UNEMP and RGDP, as well as between unemployment and inflation with causality running from RGDP to UNEMP and from inflation to UNEMP Based on the findings above, the study therefore, recommends that government should as a matter of urgency create more employment opportunities to absorb the teeming population of the unemployed labour force in the country through modernization of the agricultural sector, bring in modern equipment in the facilities of agriculture to make the sector more attractive to all citizens despite one’s qualifications and profession, as that alone would go a long way in reducing unemployment level in the country.
VL  - 8
IS  - 6
ER  -

Copy | Download