Investigating the Relationship between Economic Growth and Production Gap with Unemployment in Iran: New Evidence of Continuous Wavelet Transformation

Abstract

The study of the relationship between economic growth and the gap between real GDP and unemployment has a special place in the economic literature. In this study to investigate the causal relationship between economic growth (with and without oil sector) and unemployment and growth of production gap (with and without oil sector) and unemployment for the Iranian economy in the period 1396: 1346-4: 1 from the wavelet approach Used continuously. The continuous wavelet approach by examining and analyzing the dynamics of causal relationships between variables at different times and scales is a powerful method for examining causal relationships between variables over time. The results of the first model showed that economic growth (with the oil sector) and unemployment were not in the same time phase and were only in the short term in the period 1375: 139: 3-1369: 3. The results of the second model showed that the growth of the production gap (with the oil sector) and unemployment were not in the same time phase and were only in the short period of 2012: 1-189-2011: 1. The results of the third model showed that economic growth (excluding the oil sector) and unemployment were not parallel in all time horizons. The results of the fourth model showed that the growth of the production gap (excluding the oil sector) and unemployment in the short run in different time periods have both phase and non-phase fluctuations and in the medium term the relationship between these two variables Were not observed and were not in the long run.

Keywords

• economic growth
• gdp gap
• unemployment
• continuous wavelet transform
• iran