Macroeconomic Variables and Unemployment: The Case of Turkey

Year 2012, Volume: 2 Issue: 1, 71 - 78, 01.03.2012

Taylan Taner Doğan

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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