Reformulation of the Phillips curve in Algeria using the NARDL model. An Econometric Study (1980-2020)

Abstract

This study aims to measure and analyze the relationship between inflation and unemployment within the framework of the Phillips curve in Algeria during the period 1980-2020 using the Nonlinear Auto-Regressive Distributed Lag (NARDL) Model. The results confirm the Philips curve assumption in the long-run when it comes to the negative effects of inflation. On the other hand, this the Philips curve assumption didn’t hold true in the light of the positive effects of inflation on employment rates. Furthermore, the study asserts the existence of an asymmetry of the relationship in the short and long term between the negative and positive effects of inflation, which proved that the Phillips curve is the product of a non-linear relationship between inflation and unemployment in Algeria.