Estimate the relationship between inflation and unemployment in Kuwait using Granger Causality

Abstract

The current study aimed to measure the relationship between inflation and unemployment in the Kuwaiti economy during the period (1990-2019). By Granger causality, the study showed the existence of a causal relationship - according to Granger's concept - that moves from the inflation rate towards the variable unemployment rate at a significant level of (5%) This means that there is a probability of (95%) that price changes paid by consumers (inflation rate), precede changes that occur in the unemployment rate variable. In contrast, the results confirmed the absence of a relationship of this kind in the opposite direction.