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Estimating Pakistan's Time Varying Non-Accelerating Inflation Rate of Unemployment: An Unobserved Component Approach

Author

Listed:
  • Farzana Shaheen

    (School of Social Sciences Federal Urdu University of Arts, Sciences and Technology Islamabad, Pakistan.)

  • Azad Haider

    (School of Economics, Quaid-e-Azam University, Islamabad, Pakistan.)

  • Sajid Amin Javed

    (School of Economics, International Islamic University, Islamabad, Pakistan.)

Abstract

This paper envisages estimating the Time-Varying Non-Accelerating Inflation Rate of Unemployment (TV-NAIRU) as an unobserved stochastic variable for Pakistan over the time period 1973-74 to 2007-08 using Kalman filter. Results of the study are evident that TV-NAIRU increased from 5.3 percent (1990-91) to 8.12 percent (2004-05) and falls to 6.17 percent again in 2007-08 which is above the actual unemployment rate. The results also indicate that the NAIRU is a relevant concept and the unemployment gap should be one of the factors considered when assessing inflationary pressure in Pakistan.

Suggested Citation

  • Farzana Shaheen & Azad Haider & Sajid Amin Javed, 2011. "Estimating Pakistan's Time Varying Non-Accelerating Inflation Rate of Unemployment: An Unobserved Component Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 1(4), pages 172-179.
    • Handle: RePEc:eco:journ1:2011-04-4
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    Cited by:

    1. Muhammad Umer & Mukhtar Danladi & Babar Nawaz, 2021. "Empirical Analysis of the Phillips Curve and Okun’s Law Through Simultaneous Equation Modeling: A Case Study of Pakistan," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 3, pages 418-439.

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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