The Effect of Inflaitaion Uneployment in Emerging Countries Economy

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