Inflation and unemployment in Malaysia

Abstract

The objective of this paper is to examine the relationship between inflation and unemployment in Malaysia using annually data from 1982 until 2010 and also to see whether the Phillips curve is applicable in Malaysia. This study used the long run cointegration test and short run cointegration test (using vector error correction model, VECM). This study found the negative relationship between inflation and unemployment and this is a normal situation according to Phillips curve.