Abstract:
ABSTRACT
The main objective ofthestudywastoinvestigatetheprevalenceofPhillipcurveinTanzania.The
study was guided by three specific objectives. One was to investigate the short-run relationship
betweeninflationandunemploymentinTanzania, secondwas toexamine the long-runrelationship
between inflation and unemployment in Tanzania and lastly was examine the casualrelationship
betweeninflationandunemploymentinTanzania.Thedataforthestudyvariableswerecollected
fromWorldBankDevelopmentIndicators(WDI),forthesampleperiodof32yearsfrom1990to
2021. The coefficient oflong-run dynamics were estimated using Johansen Co-integration and the
findings indicated that, there is a long-run negative and significant relationship between public
investment and unemploymentrate in Tanzania, in such a way that, any unit increase in public
investmentwouldresultto0.863979declineinunemploymentrate,holdingotherfactorsconstant. Ontheotherhand,realGDPhasanegativeandsignificantlong-runrelationshipwithunemployment
rateinwaythatanyunitincreaserealGDPwouldleadsto2.295303decreaseinunemployment
rateholdingotherfactorsconstant.Correspondinglytothat,theresearcherhasfoundthepositive
andsignificantlong-runrelationshipbetweeninflationandunemploymentinTanzania,inawaythat, anyunitincreaseininflationratewouldresultto0.310900 increaseinunemploymentrateinthe
long-run, holding other factors constant. The coefficient is statistically significant at 5% level. The
researcherdidnotfindtheexistenceofshort-runrelationshipbetweenthevariablesandtheresult
ofrangercausalityindicatedthat,inflationdoesnotgrangercausesunemploymentinTanzania. Theresearcherrecommendedthat,thegovernmentofTanzaniathroughBOTshouldmake
appropriatecontrolofthelevelofinflationrateinthecountrysinceitmayresult toincreasein
unemployment rat
