Session
Management, Business and Economics
Description
Unemployment remains a constant concern for national governments and often causes social unrest. This study addresses the relationship between inflation and unemployment known as Phillips Curve, for the seven countries that emerged from former Yugoslavia. This phenomenon is investigated with annual data covering the period from 2003 to 2020. According to the OLS outcomes, there is a negative tradeoff within unemployment and inflation for Slovenia, Croatia, and Montenegro, which stands in line with the Phillips curve paradigm. In the case of Kosovo, North Macedonia, Serbia, and Bosnia, OLS findings indicate a positive relationship between inflation and unemployment. VAR results show that only in the case of Slovenia inflation is positively influenced by past unemployment. The impulse response function confirms that in former Yugoslav countries, positive unemployment shock to inflation holds only a short-run effect except for North Macedonia where the effect also stands in the long-run. The Johansen test shows that there is a co-integration relation between inflation and unemployment for the six selected countries except for Slovenia. From a policy perspective, results provide reliable indications for the national institutions in these countries on the importance of inflation and unemployment targeting.
Keywords:
Phillips Curve, Inflation, Unemployment, Former Yugoslav countries.
Proceedings Editor
Edmond Hajrizi
ISBN
978-9951-550-47-5
Location
UBT Kampus, Lipjan
Start Date
30-10-2021 12:00 AM
End Date
30-10-2021 12:00 AM
DOI
10.33107/ubt-ic.2021.527
Recommended Citation
Aliu, Florin; Jahja, Albulena; and Lubishtani, Ermal, "Relationship Between Inflation and Unemployment: The Case Study of Former Yugoslav Countries" (2021). UBT International Conference. 551.
https://knowledgecenter.ubt-uni.net/conference/2021UBTIC/all-events/551
Included in
Relationship Between Inflation and Unemployment: The Case Study of Former Yugoslav Countries
UBT Kampus, Lipjan
Unemployment remains a constant concern for national governments and often causes social unrest. This study addresses the relationship between inflation and unemployment known as Phillips Curve, for the seven countries that emerged from former Yugoslavia. This phenomenon is investigated with annual data covering the period from 2003 to 2020. According to the OLS outcomes, there is a negative tradeoff within unemployment and inflation for Slovenia, Croatia, and Montenegro, which stands in line with the Phillips curve paradigm. In the case of Kosovo, North Macedonia, Serbia, and Bosnia, OLS findings indicate a positive relationship between inflation and unemployment. VAR results show that only in the case of Slovenia inflation is positively influenced by past unemployment. The impulse response function confirms that in former Yugoslav countries, positive unemployment shock to inflation holds only a short-run effect except for North Macedonia where the effect also stands in the long-run. The Johansen test shows that there is a co-integration relation between inflation and unemployment for the six selected countries except for Slovenia. From a policy perspective, results provide reliable indications for the national institutions in these countries on the importance of inflation and unemployment targeting.