Exploring the relationship between inflation and unemployment in South Africa

Abstract

The paper investigates the relationship between inflation and unemployment in the South African setting, encompassing a comprehensive analysis of historical, theoretical, and empirical evidence. Existing literature surveys demonstrate that several studies have been conducted in multiple countries to ascertain the correlation between inflation and unemployment. The review incorporated the postulations of many economic schools of thought as they are applied to South Africa. The Phillips Curve was examined in accordance with the research purpose. The process involves gathering secondary data from reputable sources such as Statistics South Africa, the South African Reserve Bank, and other reliable secondary sources to analyse this relationship. The findings are presented using linear regression, tables, and figures. The study utilised annual inflation and unemployment data in South Africa spanning from 2000 to 2022 to elucidate the correlation between inflation and unemployment. The study discovered that the link was nonlinear and did not exhibit any meaningful association or correlation.

Keywords: {'name': 'Inflation'}, {'name': 'Unemployment'}, {'name': 'Philips Curve'}, {'name': 'Monetarists'}, {'name': 'Neo Keynesian'}

Authors & affiliations

Chigozie Azunna
Affiliation not supplied

Lucius Botes
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

Al-zeaud, H., & Al-hosban, S. (2015). Does Phillips curve truly exist? Empirical evidence from Jordan. European Scientific Journal, 11, 253–275.

Asif, K. (2013). Factors affecting unemployment: A cross-country analysis. International Journal of Academic Research in Business and Social Sciences, 3, 219–236.

DOI: 10.1016/j.econmod.2016.05.007

DOI: 10.3390/economies11010029

DOI: 10.20955/r.60.2-6.cjv

Chigozie, A. (2018). Youth Policies, Participation and Community Engagements. International Research Journal of Social Sciences, 7(3), 1-8.

Chigozie, A., Lucius, B., Botchway, S., & Nwogwugwu, N. (2023). Volunteerism: A New Perspective for the Post-Covid-19 Reality in South Africa. Africa Insight, 52(2).

Chris, L. (2020). South African Reserve Bank Occasional Bulletin of Economic Notes. South African Reserve Bank. OBEN/20/01, June 2020, Pretoria.

Dornbusch, R., & Fisher, S. (1990). Macroeconomics (5th ed.). New York: McGraw Hill.

DOI: 10.2307/1924157

Fisher, I. (1973). A Statistical Relation between Unemployment and Price Changes. International Labor Review, 13(6), 185-192.

DOI: 10.1086/260579

DOI: 10.1111/1468-0262.00124

DOI: 10.22610/jebs.v10i4(J).2410

DOI: 10.1111/j.1813-6982.2002.tb01298.x

DOI: 10.5089/9798400234347.001

Idalu, R. (2015). Impact of Inflation on Economic Growth. North Cyprus: Eastern Mediterranean University. Dissertation-MSc.

IMF, WB & OECD. (2023). Data basis: International Monetary Fund, World Bank and OECD Inflation CPI indicator. Retrieved from https://www.worlddata.info/africa/southafrica/inflationrates.php on January 10, 2023.

IMF. (2022). Regional Economic Outlook: Sub-Saharan Africa: Living on The Edge. October 2022. International Monetary Fund, Washington, DC.

Inflation EU. (2023). South Africa historic inflation. Retrieved from https://www.inflation.eu/en/inflation-rates/south-africa/historic-inflation/cpi inflation-south-africa.aspx on January 12, 2023.

International Labour Organization (ILO). (2022). World Employment and Social Outlook, Trends 2022. International Labour Office, Geneva.

Issing, O. (2004). Inflation targeting: A view from the ECB. Federal Reserve Bank of St. Louis Review. Journal of Economics, 86(4), 169-179.

DOI: 10.5897/JEIF2021.1124

Kelebogile K., & Ravinder, R. (2021). Inflation Targeting and Economic Growth in South Africa – An Econometric Analysis. Oeconomica, 17(3), 161-180. Acta Universitatis Danubius.

DOI: 10.2307/2551424

Lipsey, R. G., Courant, P. N., Purvis, D. D., & Steiner, P. O. (1993). Economics (10th ed.). New York: Harper Collins College Publishers.

Macrotrends. (2023). South Africa unemployment rate. Retrieved from https://www.macrotrends.net/countries/ZAF/south-africa/unemployment-rate on January 11, 2023.

DOI: 10.2307/1992031

DOI: 10.2307/1992018

Modigliani, F., & Papademos, L. (1976). Monetary Policy for the Coming Quarters: The Conflicting Views. New England Economic Review, 2(35), March/April 1976.

Mokgola, A. (2015). The effects of inflation targeting on economic growth in South Africa. University of Limpopo. Master of Commerce.

Montoriol, G. J. (2015). Growth without inflation: what does the Phillips curve tell us? Macroeconomics Unit, Strategic Planning and Research Department.

DOI: 10.1016/j.ememar.2015.05.003

National Development Plan (NDP). (2013). National Development Plan 2030. National Treasury Republic of South Africa. Communications Directorate, National Treasury. Pretoria.

DOI: 10.1016/j.ifacol.2019.12.462

DOI: 10.11606/1980-5330/ea151926

Okafor, I. G., Ezeaku, H. C., & Ugwuegbe, S. U. (2016). Responsiveness of unemployment to inflation: Empirical evidence from Nigeria. International Journal of Scientific Research in Science and Technology, 2, 173–179.

Peter, B. C., & Douglas, L. (1997). Phillips curves, Phillips lines and the unemployment costs of overheating. IMF working paper of the International Monetary Fund. Research Department International Monetary Fund.

DOI: 10.1111/j.1468-0335.1958.tb00003.x

DOI: 10.1111/j.1467-9442.2007.00511.x

Samuelson, P. A., & Solow, R. M. (1960). Analytical Aspects of Anti-inflation Policy. American Economic Review, 50, 177-194.

Sanomero, A. M., & Seater, J. J. (1978). The Inflation-Unemployment Trade-Off: A Critique of the Literature. Journal of Economic Literature, 16(2), 499-544.

DOI: 10.1086/260429

Stein, J. L. (1974). Unemployment, Inflation and Monetarism. American Economic Review, 64.

DOI: 10.1016/0304-3932(78)90002-8

Stephanie, S. (2015). Macroeconomic policy in times of slow growth and crisis. Policy Brief: 6/2015. Trade & Industrial Policy Strategies (TIPS). September 2015.

DOI: 10.13189/aeb.2020.080505

Tobin, J. (1972). Inflation and Unemployment. American Economic Review, 52, 18.

DOI: 10.1051/shsconf/202213201007

Umaru, A., Manu, D., & Salihu, M. (2013). An empirical investigation into the effect of unemployment and inflation on economic growth in Nigeria. Interdisciplinary Journal of Research in Business ISSN, 2046, 7141.

Vermeulen, J. C. (2017). Inflation and unemployment in South Africa: Is the Phillips curve still dead? Southern African Business Review, 21, 20–54.