The Effects of Unemployment on Economic Growth in Greece. An ARDL Bound Test Approach

Nikolaos Dritsakis
Pavlos Stamatiou
JEL codes: 
C22 - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models, E31 - Price Level; Inflation; Deflation, E50 - General.
The aim of this paper is to investigate the relationship between unemployment rate, economic growth and inflation rate in Greece, using annual data covering the period 1995-2015. The unit root tests results indicated that the variables have different integration order. Subsequently, the bounds testing (ARDL) approach and ECM-ARDL model are applied in order to examine the long-run and the causal relationship between the variables. The empirical results of the study revealed, both in the short and long-run, that there is a unidirectional causal relationship between unemployment and economic growth with direction from unemployment to economic growth, as well as a unidirectional causality running from inflation to economic growth.
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