Dialectic of the Relationship Between Unemployment and Economic Growth According to Okun's Law in Egypt

Abstract

The study focused on the subject of unemployment and economic growth in Egypt, using a set of econometric methods to determine the relationship between the variables of the study and to analyze the appropriateness of okun's law to the Egyptian economy. Statistical results of the unit root test indicate that the time series of the variables under study are stable at their levels. In addition, the application of Co- integration test confirmes that the variables are integrated. Moreover, it tends to be stable in the long run. however, while testing the causality of a Grager, there is a negative long-term causal relationship in one direction, going from the gross domestic product to unemployment. The analysis depends on annual data from the International Financial Statistics (IFS) published by the IMF for the period 1980-2018.The Okun coefficients estimated at -0.78, meaning that a 1% increase in economic growth leads to a decrease in unemployment of 0.78%.