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Original Research

ANALYZING AND MEASURING THE CAUSAL RELATIONSHIP BETWEEN INFLATION AND UNEMPLOYMENT THROUGH THE PHILLIPS CURVE - IRAQ, A CASE STUDY FOR THE PERIOD (2021 - 2004)

GNIN MOHAMMAD SALIH

Vol 18, No 12 ( 2023 )   |  DOI: 10.5281/zenodo.10300173   |   Author Affiliation: Department of Economics, College of Administration and Economics, University of Duhok.   |   Licensing: CC 4.0   |   Pg no: 42-56   |   Published on: 04-12-2023

Abstract

This study aims to analyze and measure the causal relationship between the inflation rate and the unemployment rate in Iraq for the period 2004-2021, utilizing the Phillips curve methodology to analyze the causal relationship between inflation and unemployment rates.The study found a weak inverse relationship between the inflation and unemployment rates in Iraq during the period 2004-2021, indicating a relative decoupling of the impact between changes in inflation and unemployment. Specifically, a decrease in the unemployment rate by an average of 0.013% is associated with a 10% increase in the inflation rate. Additionally, the correlation coefficient between the variables of the study was calculated, revealing a direct relationship. Consequently, the Phillips curve could not be established for the period 2004-2021, and what is referred to as the stagflation phenomenon became apparent. This finding suggests a minor inverse relationship between the variables, which is not consistent across all the years studied, aligning with the theoretical framework of the Phillips curve and supported by the mathematical analysis of the study.


Keywords

Unemployment Rate, Inflation Rate, Phillips Curve, Stagflation Phenomenon.