The Relation Between Unemployment and Inflation: An Empirical Analysis for NUTS-2 Regions in Turkey

Abstract

Unemployment and inflation rates have an important place among macroeconomic indicators. Because both two positive or negative change of indicators affect the country’s economy directly or indirectly. In this context the aim of study is to analyze the relation between unemployment and inflation for NUTS-2 regions in Turkey. In this study, panel data analyze is employed to establish the relation between unemployment and inflation by using the data between 2008-2017. In this respect, F test, Breusch-Pagan LM and Honda tests are applied to estimate the method of the study. As a result of these tests, it was found that the fixed-effects method was more suitable for the analysis of the study. Then, it is analyzed whether the heteroscedasticity and autocorrelation problem exist. According to the results of the least squares estimation based on fixed-effects model, a negative relationship was found between unemployment and inflation.

Keywords

• inflation
• unemployment
• panel data analyze
• turkey
• nuts-2 regions