Exploring the relationship between inflation and unemployment in South Africa: A historical, theoretical, and empirical review

Abstract

The paper investigates the relationship between inflation and unemployment in the South African setting, encompassing a comprehensive analysis of historical, theoretical, and empirical evidence. Existing literature surveys demonstrate that several studies have been conducted in multiple countries to ascertain the correlation between inflation and unemployment. The review incorporated the postulations of many economic schools of thought as they are applied to South Africa. The Phillips Curve was examined in accordance with the research purpose. The process involves gathering secondary data from reputable sources such as Statistics South Africa, the South African Reserve Bank, and other reliable secondary sources to analyse this relationship. The findings are presented using linear regression, tables, and figures. The study utilised annual inflation and unemployment data in South Africa spanning from 2000 to 2022 to elucidate the correlation between inflation and unemployment. The study discovered that the link was nonlinear and did not exhibit any meaningful association or correlation.