Determinants of unemployment rate in an open economy: Malaysian evidence

Nurul Ghafar and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: The focus of this paper is on the determinants of unemployment rate and economic variables in an open economy. Malaysia is taken as a case study. The standard time series techniques such as, VECM and VDC are used for the analysis. The results based mostly on variance decompositions (VDC) tend to indicate that in an open economy like Malaysia, the unemployment rate appears to be an endogenous (i.e., dependent) variable driven mostly by the inflation rate followed by private consumption and population variables. The results are plausible and intuitive and have strong policy implications for the developing countries like Malaysia.

Keywords: unemployment rate; macroeconomic variables; open economy; VECM; VDC; Malaysia (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 G15 (search for similar items in EconPapers)
Date: 2016-08-30
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