Examining the nexus between inflation and unemployment in Ghana: the Philips Curve Model.

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Inflation and unemployment are perhaps the two most important challenges that face the Ghanaian economy of today. The study seeks to examine the nexus between these two macroeconomic variable in Ghana by considering the existence of the Phillips curve, using ARDL and the VAR modeling technique. By introducing other explanatory variables (exchange rate and interest rate), the model regresses the rate of inflation variable against the variable of interest (unemployment), exchange rate and interest rate growth over the period 1991 to 2014. The result indicates that, there is no long-run relationship between inflation and unemployment, there no short-run relationship between inflation and unemployment and both inflation and unemployment does not granger cause each other. The possible reason for the result could be due to; large labour force and longer period searching for job, increase in employment does not amount to higher inflation.
A dissertation submitted to the Department of Economics. Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirement for the degree of Msc Economics,