Macroeconomic Variables and Unemployment: The Case of Turkey

Abstract

This study investigates the response of unemployment to selective macroeconomics shocks for the period of 2000:Q1-2010:Q1. It finds that positive shocks to growth, growth in export and inflation reduce unemployment. On the other hand, shocks to exchange rate, interbank interest rate and money supply increase unemployment. The results are consistent with Phillips curve and Okun’s Law suggestion. Namely, negative relationship between output and unemployment and positive relationship between unemployment and inflation are found. Also, this study finds consistent results with earlier literature.

Keywords

• Macroeconomic variables, Vector Autoregressive Model, Impulse-response function

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