INFLATION, ECONOMIC GROWTH, AND UNEMPLOYMENT: REVISITING THE PHILLIPS AND OKUN FRAMEWORKS IN THE CONTEXT OF JOB CREATION
DOI:
https://doi.org/10.5281/zenodo.18726047Keywords:
Inflation; Economic Growth; Unemployment; Phillips Curve; Okun’s Law; Job Creation; Macroeconomic Stability.Abstract
This article presents a systematic review of the theoretical and empirical literature examining the interrelationship
between inflation, economic growth, and unemployment within the frameworks of the Phillips Curve and Okun’s Law.
The study critically reassesses these foundational macroeconomic relationships in the context of job creation and job
destruction, with particular attention to emerging and transitional economies.
The review synthesises classical, expectations-augmented, and New Keynesian interpretations of the inflation–
unemployment trade-off, alongside modern extensions incorporating nonlinearity, asymmetry, and structural breaks
in the growth–unemployment nexus. It evaluates how macroeconomic instability, supply shocks, policy regimes, and
institutional characteristics influence the stability and magnitude of these relationships over time.
Special attention is devoted to empirical evidence from developing and post-transition economies, where traditional
linear specifications often fail to capture labour market dynamics. The article highlights the importance of incorporating
cyclical asymmetries, business-cycle phases, and structural constraints when analysing employment responses to
macroeconomic fluctuations.
Methodologically, the study adopts a structured analytical review approach, comparing theoretical propositions with crosscountry
empirical findings. Job creation and job destruction are conceptualised as macroeconomically driven processes
shaped not only by output dynamics but also by inflation expectations, monetary–fiscal coordination, and institutional
settings.
The contribution of the article lies in integrating the Phillips and Okun frameworks into a unified analytical perspective
that links macroeconomic volatility to employment dynamics. By systematising existing evidence, the review provides a
conceptual foundation for future empirical modelling and policy design aimed at promoting sustainable and employmentintensive
economic growth.
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