The Relationship Between Unemployment and Inflation in Turkey: A Correlation Analysis

Gulener, Kaan (2024): The Relationship Between Unemployment and Inflation in Turkey: A Correlation Analysis.

Abstract

This study examines the complex relationship between unemployment and inflation in Turkey over a 64-year period, from 1960 to 2023. Utilizing correlation analysis and simple linear regression, we investigate the long-term connection between these two key macroeconomic indicators. Our findings reveal a moderate positive correlation between unemployment and inflation, challenging the traditional inverse relationship proposed by the Phillips Curve. This unexpected result suggests that, in Turkey's economic context, periods of higher unemployment have generally coincided with higher inflation rates. The paper provides a comprehensive review of relevant literature, analyzing the historical data within the framework of Turkey's evolving economic landscape. Our research contributes to the ongoing debate on the validity of the Phillips Curve in emerging economies and offers insights into the unique economic dynamics of Turkey. The study's results highlight the need for tailored economic models and policies that account for Turkey's specific economic conditions. Furthermore, our analysis reveals patterns of economic stability and turbulence throughout the studied period, providing a valuable historical perspective on Turkey's economic development. These findings have significant implications for policymakers navigating the complex interplay between unemployment and inflation in Turkey and potentially in other emerging economies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation; Unemployment; Phillips Curve; Turkish Economy
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General

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