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An Econometric Analysis of Inflation and Unemployment in Lebanon: A Vector Error Correction Model (VECM)

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  • Mohammad Khanssa
  • Wafaa Nasser
  • Abbas Mourad

Abstract

This paper uses econometric modeling to test the nature of the relationship between unemployment and inflation in Lebanon throughout the period 1993-2014. It takes the Phillips curve relationship as a reference for the tests. Cointegration, Granger causality and VECM were used to test the relationship both in the short and in the long run. The study resulted in finding out that the Phillips curve relationship doesn¡¯t hold in Lebanon in the short run and came to a conclusion that there is a one-way causality relationship in the long run from unemployment to inflation and not in the opposite direction.

Suggested Citation

  • Mohammad Khanssa & Wafaa Nasser & Abbas Mourad, 2018. "An Econometric Analysis of Inflation and Unemployment in Lebanon: A Vector Error Correction Model (VECM)," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(2), pages 133-141, February.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:2:p:133-141
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    unemployment; inflation; cointegration; Vector Error Correction Model (VECM); Granger causality;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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