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In this paper, it is investigated that whether or not a long-term relation exists between growth rate and unemployment rate. To this end, Johansen (1988) method was used to estimate the cointegration relation between the two variables via six month data covering 1988:2-2006:1 period. As to the consequences acquired, one long-term or equilibrium relation exists between growth rate and unemployment rate. Hsiao (1981)’s Granger causality test (FPE criterion) and Granger causality tests conducted via VECM indicate the existence of only one causality relation from unemployment rate to growth rate.
In this paper, it is investigated that whether or not a long-term relationship exists between growth rate and unemployment rate. To this end, Johansen (1988) method was used to estimate the cointegration relationship between the two variables via six month data covering 1988:2-2006:1 period. As to the consequences acquired, a long-term or balance relationship exists between growth rate and unemployment rate. Hsiao (1981)'s Granger causality test (FPE criterion) and Granger causality tests conducted via VECM indicate the existence of only one causality relationship from unemployment rate to growth rate.
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