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Re-visiting the Validity of Phillip’s Curve in the Context of the BRICS Countries

Umaru Aminu, Ejila Solomon Oxford Ali, Dogo Bishara Saidu and Yunana Nancy Zigwai

The Review of Finance and Banking, 2023, vol. 15, issue 1, 7-16

Abstract: The coexistence of inflation and unemployment rates especially in developing economies has been generating a lot of debate among researchers concerning the validity of Phillip’s curve. The current study examines the validity of Phillip’s curve in the context of the BRICS countries comprises of Brazil, Russia, India, China, and South Africa using data from the World Bank database (2020) and analyzed using a random effect static panel regression analysis. We find that the unemployment rate and output negatively and significantly influenced the inflation rate in the BRICS countries, which validates Phillip’s curve. This implies that raising unemployment and output level may likely reduce inflation rate in the BRICS countries. We, therefore, recommend the need for policymakers to choose to either stabilize prices or reduce unemployment. Also, the need for government to reduce inflation by increasing output thereby generating employment for the people. The BRICS countries should focus more on the labor-intensive technique of production to reduce the cost of production, create jobs and reduce prices.

Date: 2023
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