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The Relationship between Inflation and Unemployment in Ghana: Analysis of the Philips Curve

African Journal of Economic Review

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Title The Relationship between Inflation and Unemployment in Ghana: Analysis of the Philips Curve
 
Creator Elliot, B
 
Subject Inflation, Unemployment, Philips curve, Ghana
 
Description The aim of this study is to explore the relationship between inflation and unemployment in Ghana. The study also aims to test for the existent of the Philips curve in Ghana using the new Keynesian Philips curve model on annual time series data sampled from 1970 to 2013. The sample period was divided into two subsamples -from 1970 to 1982 and 1983 to 2013- in order to test for the effect of the Economic Recovery Programme on the relationship between inflation and unemployment. The empirical estimate reveals that, changes in unemployment does not brings about changes in inflation both subsample periods. Again, the study rejects evidence of the Philips curve in Ghana. This is attributed to the fast growing labour force that lack the appropriate skills to earn them a job placement, alarming rate of rural-urban migration, imperfect market information which has resulted in mismatch of that makes inflation unresponsive to changes in unemployment. Monetary policies to influence inflation would not bring about any trade-off between inflation and unemployment. To reduce the ever increasing unemployment in Ghana, policy direction should focus on creating job opportunities for both uneducated and educated individuals.Keywords: Inflation, Unemployment, Philips curve, Ghana
 
Publisher Centre for Economics and Community Economic Development
 
Contributor —
 
Date 2015-07-16
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ajol.info/index.php/ajer/article/view/119486
 
Source African Journal of Economic Review; Vol 3, No 2 (2015); 117-124
1821-8148
 
Language eng
 
Relation http://www.ajol.info/index.php/ajer/article/view/119486/108943
 
Rights The copyright belongs to: African Journal of Economic Review, Centre for Economics and Community Economic Development, The Open University of Tanzania, P.O.Box 23409, Dar es salaam, Tanzania