the relationship between the relationshipbetweeninflation, unemployment and economic growthin Algeria usingthe Co-integration and ECM model

Abstract

This researchexaminesthe relationshipbetweenunemployment, inflation and economic growth ratesin Algeria duringthe period of1991-2013, usingthe methodology of the Co-integration, causality test and ECM model. . The research found that the time series of inflation rate and unemployment rate and GDP are non-stationary, and to make them stationary the first differences are applied. Therefore, the time series are integrated of the first orders and using Johanson test, we found a co-integration betweeninflation and economic growth rates in Algeria, in addition to a causal relationship in one directionbetween them. After error correction model estimation, we found that the actual deviation from equilibrium between the two variables, iscorrected by 32.41 each year.