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Impact of Inflation in Different States of Unemployment: Evidence with the Phillips Curve in South Africa from 2008 to 2022

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  • Eugene Msizi Buthelezi

    (Department of Economics, University of Free State, Bloemfontein 9301, South Africa)

Abstract

This paper investigates the impact of inflation in different states of unemployment: evidence with the Phillips curve in South Africa. The contribution of this paper is to examine the impact of inflation on different states of unemployment in South Africa. The Paper employs Markov-switching dynamic regression and data from 2008 to 2022. It was found that there are 2 states of unemployment mean rates of 25.55% and 33.59%, expected to run for 67 and 7 quarters, respectively. There is a 98.51% and 86.99% chance of a move and then returning to the same state, respectively. In states 1 and 2, a 1% increase in inflation results in a 2.61% increase and a 0.06% decrease in unemployment, respectively. There are times when the Phillips curve rationale is not holding. The government needs to increase the channels of employment opportunities. There is a need to re-look at the trade-offs between inflation and unemployment in the economy.

Suggested Citation

  • Eugene Msizi Buthelezi, 2023. "Impact of Inflation in Different States of Unemployment: Evidence with the Phillips Curve in South Africa from 2008 to 2022," Economies, MDPI, vol. 11(1), pages 1-12, January.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:1:p:29-:d:1035607
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    5. Amusa, Kafayat & Gupta, Rangan & Karolia, Shaakira & Simo-Kengne, Beatrice D., 2013. "The long-run impact of inflation in South Africa," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 798-812.
    6. Nikolaos Papanikolaou, 2020. "Markov-Switching Model of Family Income Quintile Shares," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(2), pages 207-222, June.
    7. Brian Reinbold & Yi Wen, 2020. "Is the Phillips Curve Still Alive?," Review, Federal Reserve Bank of St. Louis, vol. 102(2), pages 121-144, May.
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    Cited by:

    1. Dr.Muhammad Shakeel & Muhammad Usman & Arooj Zahra & Aqsa Bakhshi, 2023. "The Role of Consumer Prices, Economic Growth and Rising Population in Determining Unemployment: A Time Series Evidence from Cyprus Economy," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 12(3), pages 334-339.
    2. Lotfi Masmoudi & Rima Aloulou & Kamel Helali, 2025. "Empirical analysis of the mixed results of the Phillips curve in Tunisia: ARDL nexus NARDL," SN Business & Economics, Springer, vol. 5(6), pages 1-24, June.
    3. Stephen G. Hall, 2025. "An optimal inflation rate for South Africa," Economic Change and Restructuring, Springer, vol. 58(3), pages 1-29, June.

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