Economic Growth, Inflation and Unemployment. An Empirical Evidence using the ARDL approach from Tunisia, Egypt and Saudi Arabia

This paper investigates the relationship between inflation, unemployment and economic growth in Tunisia, Egypt and Saudi Arabia over the period 1989-2021. This paper attempts to study the effect of inflation and unemployment on short-and long-term economic growth for countries affected by the political upheavals of the Arab Spring such as Tunisia and Egypt, and the example of Saudi Arabia as a country affected by instability in the energy market and the covid 19 pandemic. It begins with the application of Augmented Dickey-Fuller techniques to examine the unit root property of the time series data after which Auto-regressive Distributive Lag Model (ARDL) was used to determine the cointegration or long-run relationship. The existence of the long-term relationship between the variables is validated by the ARDL approach. The results suggest that there is a long-term equilibrium relationship whose growth is explained by un-employment in the case of Tunisia. The results validate the unemployment persistence effect for Egypt. The results also show that unemployment in the previous period constitutes a stimulus for current growth. For the inflation rate, the results show that the relationship is statistically insignificant for Egypt and Tunisia, but it significantly affects the growth of Saudi Arabia, which benefits from increases in commodity prices.