Reexamining Phillips Curve: An Empirical Analysis From Structural Vector Autoregression

  • Gatot Sasongko Satya Wacana Christian University
  • Martha Patricia Yolanda Satya Wacana Christian University
  • Andrian Dolfriandra Huruta Satya Wacana Christian University https://orcid.org/0000-0001-7676-5294
  • Min-Sun Kim Chung Yuan Christian University
Keywords: Phillips Curve, Unemployment, Inflation, SVAR, Indonesia

Abstract


In the literature, the existence of the Phillips curve in every country has been extensively explored. The goal of this research is to investigate the inflation-unemployment trade-off in Indonesia. We used secondary data for 1977 through 2019 from the World Bank for analysis. The Structural Vector Autoregression (SVAR) results revealed a negative connection between unemployment and inflation. There is a one-way relationship between unemployment and inflation in particular. We discovered several factors that influence unemployment. Those factors include working population over 15 years old according to the primary employment (both field and status) and Gross Domestic Product at constant prices according to expenditures.

Author Biographies

Gatot Sasongko, Satya Wacana Christian University

Department of Economics, Satya Wacana Christian University, 52-60 Diponegoro Rd, Salatiga City, 50711, Indonesia

Martha Patricia Yolanda, Satya Wacana Christian University

Department of Economics, Satya Wacana Christian University, 52-60 Diponegoro Rd, Salatiga City, 50711, Indonesia

Andrian Dolfriandra Huruta, Satya Wacana Christian University

Department of Economics, Satya Wacana Christian University, 52-60 Diponegoro Rd, Salatiga City, 50711, Indonesia

Min-Sun Kim, Chung Yuan Christian University

International Undergraduate Program in Business and Management, Chung Yuan Christian University, 200 Zhong Bei Rd, Zhong Li District, Taoyuan City, 32023, Taiwan, ROC

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Published
2022/04/20
Section
Original Scientific Paper