The Impact Of Inflation On The Unemployment Rate In Algeria

Abstract

This paper explores the relationship between unemployment and inflation in Algeria within the Phillips Curve theoretical framework over the 1990–2023 period. The Autoregressive Distributed Lag (ARDL) method is employed in this paper to estimate the dynamic relation between main macroeconomic indicators. Unemployment is modeled as the dependent variable, and inflation, the real effective exchange rate, and international oil prices are introduced as explanatory variables. On the basis of time series data, the research seeks to confirm the validity of the Phillips Curve both in the short and the long run. The empirical findings reveal the absence of a statistically significant long-run relation between inflation and unemployment, suggesting that the Phillips Curve is not valid in the Algerian context in the long run. These results underscore the insufficiencies of conventional macroeconomic assumptions for the Algerian economy and demand more context-specific policy models that pay attention to structural characteristics and external shocks.