Research Article
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Year 2018, Volume: 7 Issue: 1, 76 - 82, 30.03.2018
https://doi.org/10.17261/Pressacademia.2018.796

Abstract

References

  • Aguiar, A. and Martins, M.M.F. (2005). Testing the significance and the non-linearity of Phillips trade-off in the Euro area. Empirical Economics, 30(3), 665-691.
  • Barnes, M. R. and Olivei, G. P. (2003). Inside and Outside Bounds Threshold estimate of the Phillips Curve. New England Economic Review, 3-18.
  • Burger, P and Marinkov, M. (2006). The South African Phillips Curve: How applicable is the Gordon Model? . South African Journal of Economics, 74(2), 172-189.
  • Chan, K.S. (1993). Consistency and Limiting Distribution of the Least Squares Estimation of a Threshold Autoregressive Model. The Annals of Statistics, 21(1), 520-533.
  • Eliasson A-C. (2001). Is the short run Phillips Curve nonlinear? Empirical Evidence for Australia, Sweden and The United States. Sveriges Risksbank Working paper series, No.124
  • Elliot, B. Rothenberg, T. and Stock, J. (1996). Efficient tests of the unit root hypothesis. Econometrica, 64(8), 13-36.
  • Enders,W and Siklos, P.L. (2001). Co-integration and Threshold adjustment. Journal of Business and Economic Statistics, 19(2), 166-176.
  • Engel, R. F. and Granger C.W. (1987). Co-integration and Error correction: Representation, estimation and testing. Econometrica, 55(2),251-276.
  • Feenstra, R.C., Inklaar, R., and Timmer, M.P. (2015). The Next Generation of the Penn World Table. American Economic Review, 105(10), 3150-3182.
  • Gordon, R. (1997). The time-varying NAIRU and its implications for Economic Policy. Journal of Economic Perspectives, .4(1), 11-32.
  • Hasanov M., Araç A., Telatar F. (2010). Nonlinearity and structural stability in the Phillips Curve: Evidence from Turkey. Economic Modeling, 27(5), 1103-1115.
  • Hodge, D.(2002). Inflation versus unemployment in South Africa: Is there a trade-off?. South African Journal of Economics, 70(3), 193-204.
  • Islam F. Shahbaz M. and Shabbir M. (2011). Phillips Curve in a small open Economy: A time series exploration of North Cyprus. MPRA paper No.28397, Retrieve from: http://mpra.ub.uni-muenchen.de/2397/.
  • Ormerod, P., Rosewell, B. and Phelps, P. (2013). Inflation, Unemployment regimes and the instability of the Phillips curve. Applied Economics, 4(12), 1519-1531. DOI:10.1080/00036846.201.628299.
  • Peach, R. W., Rich, R. W., and Cororaton, A. (2011). How does slack influence inflation?. Current Issues in Economics and Finance, 17(3), .17.
  • Petrucelli, J. and Woodford, S. (1984). A Threshold AR(1) Model. Journal of Applied Probability, 21(2), 270-286.
  • Phillips, A.W. (1958). The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1957. Economica, 25(100), 283-299.
  • Samuelson, P. A. and Solow, R. M. (1960). Analytical Aspect of Anti-Inflation Policy. American Economic Review, 50(2), 177-194.
  • Taiwo, V. O. and Folorunso, E. (2013). Does Phillips Relation Really Exist in Nigeria?Empirical Evidence. International Journal of Economics and Finance, 5(9), 123-133.
  • Tang C.F and Lean H.H. (2007). The stability of Phillips Curve in Malaysia. Monash University Business and Economics Discussion paper No.39.
  • Kumar A. and Orrenius P. (2015). A Closer look at the Phillips Curve using state level data. Federal Reserve Bank of Dallas Research Department Working Paper No.1409
  • Umaru, A. and Zubairu A.B. (2012). An empirical Analysis of the Relationship between unemployment and Inflation in Nigeria from19772009. Economics and Finance Review, 1(2), 42-61.
  • Vermeulen J.C. (2017). Inflation and unemployment in South Africa: Is the Phillips Curve still dead?. Southern African Business Review, 21(1), 20-54.

NONLINEAR EQUILIBRIUM RELATIONSHIP BETWEEN INFLATION AND EMPLOYMENT: EVIDENCE FROM CÔTE D’IVOIRE

Year 2018, Volume: 7 Issue: 1, 76 - 82, 30.03.2018
https://doi.org/10.17261/Pressacademia.2018.796

Abstract

Purpose- The main objective of this paper is to test the existence of
a stable long-run relationship between price level and employment for an
African country.



Methodology- This paper employs two types of co-integration and
error correction methodologies: the Engel-Granger cointegration model which
assumes symmetric adjustment toward equilibrium and a  Threshold co-integration approach  that considers asymmetric adjustment toward
equilibrium. Before making cointegration analysis we apply unit root test to
check for the stationnarity of the series.



Findings- We found
evidence of a stable long-run relationship between price level and employment
in Côte d’Ivoire and a positive relationship between the two variables.
However, the adjustment towards the equilibrium is asymmetric since positive
shocks are absorbed more rapidly than negative ones.  Moreover, there was no causality between the
two variables in the short run.



Conclusion- The results indicate that in Côte d’Ivoire, inflation
stability may be incomptaible with employment maximization. So to reduce
unemployment rate, it is necessary to accept a certain level of inflation rate. 

References

  • Aguiar, A. and Martins, M.M.F. (2005). Testing the significance and the non-linearity of Phillips trade-off in the Euro area. Empirical Economics, 30(3), 665-691.
  • Barnes, M. R. and Olivei, G. P. (2003). Inside and Outside Bounds Threshold estimate of the Phillips Curve. New England Economic Review, 3-18.
  • Burger, P and Marinkov, M. (2006). The South African Phillips Curve: How applicable is the Gordon Model? . South African Journal of Economics, 74(2), 172-189.
  • Chan, K.S. (1993). Consistency and Limiting Distribution of the Least Squares Estimation of a Threshold Autoregressive Model. The Annals of Statistics, 21(1), 520-533.
  • Eliasson A-C. (2001). Is the short run Phillips Curve nonlinear? Empirical Evidence for Australia, Sweden and The United States. Sveriges Risksbank Working paper series, No.124
  • Elliot, B. Rothenberg, T. and Stock, J. (1996). Efficient tests of the unit root hypothesis. Econometrica, 64(8), 13-36.
  • Enders,W and Siklos, P.L. (2001). Co-integration and Threshold adjustment. Journal of Business and Economic Statistics, 19(2), 166-176.
  • Engel, R. F. and Granger C.W. (1987). Co-integration and Error correction: Representation, estimation and testing. Econometrica, 55(2),251-276.
  • Feenstra, R.C., Inklaar, R., and Timmer, M.P. (2015). The Next Generation of the Penn World Table. American Economic Review, 105(10), 3150-3182.
  • Gordon, R. (1997). The time-varying NAIRU and its implications for Economic Policy. Journal of Economic Perspectives, .4(1), 11-32.
  • Hasanov M., Araç A., Telatar F. (2010). Nonlinearity and structural stability in the Phillips Curve: Evidence from Turkey. Economic Modeling, 27(5), 1103-1115.
  • Hodge, D.(2002). Inflation versus unemployment in South Africa: Is there a trade-off?. South African Journal of Economics, 70(3), 193-204.
  • Islam F. Shahbaz M. and Shabbir M. (2011). Phillips Curve in a small open Economy: A time series exploration of North Cyprus. MPRA paper No.28397, Retrieve from: http://mpra.ub.uni-muenchen.de/2397/.
  • Ormerod, P., Rosewell, B. and Phelps, P. (2013). Inflation, Unemployment regimes and the instability of the Phillips curve. Applied Economics, 4(12), 1519-1531. DOI:10.1080/00036846.201.628299.
  • Peach, R. W., Rich, R. W., and Cororaton, A. (2011). How does slack influence inflation?. Current Issues in Economics and Finance, 17(3), .17.
  • Petrucelli, J. and Woodford, S. (1984). A Threshold AR(1) Model. Journal of Applied Probability, 21(2), 270-286.
  • Phillips, A.W. (1958). The relation between unemployment and the rate of change of money wage rates in the United Kingdom, 1861-1957. Economica, 25(100), 283-299.
  • Samuelson, P. A. and Solow, R. M. (1960). Analytical Aspect of Anti-Inflation Policy. American Economic Review, 50(2), 177-194.
  • Taiwo, V. O. and Folorunso, E. (2013). Does Phillips Relation Really Exist in Nigeria?Empirical Evidence. International Journal of Economics and Finance, 5(9), 123-133.
  • Tang C.F and Lean H.H. (2007). The stability of Phillips Curve in Malaysia. Monash University Business and Economics Discussion paper No.39.
  • Kumar A. and Orrenius P. (2015). A Closer look at the Phillips Curve using state level data. Federal Reserve Bank of Dallas Research Department Working Paper No.1409
  • Umaru, A. and Zubairu A.B. (2012). An empirical Analysis of the Relationship between unemployment and Inflation in Nigeria from19772009. Economics and Finance Review, 1(2), 42-61.
  • Vermeulen J.C. (2017). Inflation and unemployment in South Africa: Is the Phillips Curve still dead?. Southern African Business Review, 21(1), 20-54.
There are 23 citations in total.

Details

Primary Language English
Journal Section Articles
Authors

Coffie Francis José N'guessan This is me 0000-0002-4484-6484

Publication Date March 30, 2018
Published in Issue Year 2018 Volume: 7 Issue: 1

Cite

APA N’guessan, C. F. J. (2018). NONLINEAR EQUILIBRIUM RELATIONSHIP BETWEEN INFLATION AND EMPLOYMENT: EVIDENCE FROM CÔTE D’IVOIRE. Journal of Business Economics and Finance, 7(1), 76-82. https://doi.org/10.17261/Pressacademia.2018.796

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