The purpose of this study is to analyze the relationship between gross domestic product growth (GDPG) and inflation (INF), unemployment youth male (UNYM), and unemployment youth female (UNYF), to analyze the nature of elasticity, and to evaluate the threshold where GDPG changes. Time-series data covering 1970 -2018 were used to examine the impact of INF and UNYM, and UNYF on GDPG. To estimate the relationship between GDPG and INF and UNYM, and UNYF, regression analysis was performed. Rainbow test was used to test the linearity of the model, Breusch-Pagan test was used to test homoscedasticity, Box Ljung Test was used to test autocorrelation, Phillips-Perron Unit Root Test was used to test whether time series were stationary. Elasticity was applied to measure the degree of responsiveness of change in GDPG to changes in INF and UNYM, and UNYF levels. Data analysis was performed using R and JASP. Results revealed a statistically significant negative relationship between GDPG and INF, UNYM and UNYF. Moreover, the result showed that GDPG responded strongly towards change in inflation and unemployment youth. A threshold was found beyond which GDPG became negative while under the threshold, GDPG continued to grow. To increase economic growth, Burundi should reduce inflation and unemployment youth under the threshold. Burundi should also focus on reducing female unemployment rate as it has great impact on economic growth. Burundi should stimulate entrepreneurship as it contributes in new job creation.
Table of Contents
1. Introduction
2. Problem Statement
3. Literature Review
4. Study Objective
5. Significance of the Study
6. Methodology
7. Data Discussion
8. Conclusion
Objectives and Research Focus
The primary objective of this study is to analyze the relationship between gross domestic product growth (GDPG) and macroeconomic indicators such as inflation, male youth unemployment, and female youth unemployment in Burundi. By applying time-series data and threshold regression models, the research aims to quantify the nature of elasticity between these variables and identify specific thresholds beyond which economic growth is adversely affected.
- Analysis of the correlation between inflation and economic growth.
- Examination of the impact of male and female youth unemployment on GDP.
- Evaluation of elasticity to determine the responsiveness of GDP growth to macroeconomic changes.
- Identification of critical threshold levels for inflation and unemployment.
- Formulation of policy recommendations for sustainable economic growth in Burundi.
Excerpt from the Book
Literature Review
Inflation and unemployment are two macroeconomic indicators that got much attention from policymakers, and scholars. While economic growth is an indicator of country wealth, unemployment rate is an indication of a country’s weakness in the total use of its human resources. Various topics have been developed whether to identify to what extent there are related to economic growth, or their causes, and their consequences in the society. Ademola and Badiru (2016) identified various definitions given to inflation. The main idea from all definition is that inflation refers to a general increase of price level of broad spectrum of goods and services over a long period of time. It is calculated as the rate of growth in the general price level over a given period of time. To the neo-classical considered inflation as a monetary phenomenon, and inflation occurs when there is more rapid increase in the quantity of money than output.
Chapter Summaries
Introduction: This chapter contextualizes the economic crisis in Burundi since 2015 and reviews existing theoretical debates regarding the impact of inflation on long-term economic growth.
Problem Statement: This section outlines the economic challenges in Burundi, highlighting the need for strategic interventions to manage inflation and unemployment to foster prosperity.
Literature Review: This chapter provides a theoretical foundation by defining key macroeconomic terms and summarizing previous empirical studies on the relationship between inflation, unemployment, and growth.
Study Objective: This chapter defines the research goals, specifically focusing on investigating the elasticity and threshold levels of inflation and youth unemployment relative to economic growth.
Significance of the Study: This section explains the academic and practical importance of the study, emphasizing its contribution to existing literature and policy decision-making in Burundi.
Methodology: This chapter details the data collection from the World Bank and the statistical techniques, including regression analysis and unit root tests, used to ensure empirical rigor.
Data Discussion: This chapter presents the empirical results, including descriptive statistics, regression tables, and elasticity analysis of the impact of inflation and unemployment on GDP.
Conclusion: This chapter synthesizes the research findings, confirming a significant negative relationship between the studied variables and offering policy recommendations for economic improvement.
Keywords
Burundi, Economic Growth, Inflation, Youth Unemployment, Threshold, Regression Analysis, Macroeconomic Indicators, Elasticity, GDP, Policy, Development, Labor Market, Time-Series Data, Fiscal Policy, Monetary Policy.
Frequently Asked Questions
What is the primary focus of this research?
The study investigates the relationship between gross domestic product growth (GDPG) and key macroeconomic variables—specifically inflation and youth unemployment—within the context of the Burundian economy.
What are the central thematic fields covered?
The work integrates themes of macroeconomics, specifically examining the impacts of inflation and youth labor market conditions (male and female) on a country's national wealth and output.
What is the main research question or objective?
The research aims to determine the elasticity of economic growth in relation to inflation and unemployment, and to identify specific thresholds for these variables where economic growth patterns shift from positive to negative.
Which scientific methodology is employed?
The study utilizes quantitative methods, including regression analysis and threshold regression models, applied to time-series data covering the period from 1970 to 2019.
What topics are discussed in the main body?
The main body covers the current economic state of Burundi, a comprehensive literature review of growth theories, the methodological framework, data analysis tables, and discussions on threshold effects.
Which keywords characterize this work?
The work is characterized by terms such as Burundi, economic growth, inflation, youth unemployment, threshold, and elasticity.
How does female unemployment specifically impact economic growth?
The empirical results indicate a strong negative relationship, suggesting that reducing the female unemployment rate is a crucial lever for improving overall economic growth in Burundi.
What is the significance of identifying a "threshold"?
Identifying thresholds is essential for policymakers to understand the tipping points at which inflation or unemployment rates start to actively hinder economic progress, allowing for more targeted economic management.
What does the elasticity analysis reveal about inflation?
The analysis shows that GDP growth exhibits inelastic responsiveness to inflation, meaning that economic growth changes less than the inflation rate itself.
- Arbeit zitieren
- Master Antoine Niyungeko (Autor:in), 2020, Analysing Relationship between Economic Growth and Inflation and Unemployment Youth in Burundi. Elasticity and Threshold, München, GRIN Verlag, https://www.grin.com/document/951170
