Empirical analysis of the mixed results of the Phillips curve in Tunisia: ARDL nexus NARDL

Lotfi Masmoudi (), Rima Aloulou () and Kamel Helali ()
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Lotfi Masmoudi: University of Sfax
Rima Aloulou: University of Sfax
Kamel Helali: University of Sfax

SN Business & Economics, 2025, vol. 5, issue 6, 1-24

Abstract: Abstract This article aims to investigate the nature and characteristics of the correlation between inflation and Tunisia’s unemployment rate from 1970 to 2020. Tunisia has experienced one of the highest unemployment and inflation rates in the Mediterranean Area. The empirical study demonstrates a long-term equilibrium between inflation and unemployment using the autoregressive distributed lag model (ARDL) and the nonlinear autoregressive distributed lag model (NARDL). The ARDL model’s results indicate that the unemployment rate is significantly and negatively impacted by the inflation rate, with a value of -0.526. However, based on the NARDL model’s results, we observe a long-term asymmetric effect. More precisely, we observe a positive and significant impact of low unemployment, evaluated at 0.581, and a negative and significant effect of high unemployment, evaluated at -0.695. The rigidity of labor market regulations has led to distortions that hinder the Tunisian labor market’s smooth operation. It is recommended that these “dysfunctions” be eliminated to increase the efficiency of the labor market’s operation. The quest for greater labor flexibility will make Tunisia’s labor market mechanisms function usually and efficiently.

Keywords: Phillips curve; Inflation; Unemployment; ARDL; NARDL (search for similar items in EconPapers)
JEL-codes: B23 C54 E24 E31 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00829-4

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