EFFECT OF GDP AND INFLATION ON UNEMPLOYMENT, CASE STUDY OF SUDAN

Abstract

Abstract The purpose of this paper is to find out the effect of GDP and inflation on unemployment in Sudan from 1990 to 2020. Unemployment is taken as a dependent variable in this paper, GDP, and inflation as an explanatory variable. The augmented Dicky- Fuller test and Ordinary Least Square (OLS) method have been applied in this paper. The main findings of the paper depict that there is no unit root problem as all the variables are stationary at the level. The results of multiple linear regression models indicate that GDP has a negative and significant effect on unemployment, while inflation has a significant and positive effect on unemployment in Sudan. It also the diagnostic result of the paper shows that the model is free from heteroscedasticity. The R-squared value is 74% for the model; therefore, the model delivers a comparatively good fit of the data. This paper will help policymakers to modify the policy to reduce the unemployment rate in Sudan. The government should also embark on the creation of more job opportunities forthe people through construction and setting up more industries to mobilize and create more jobs for the people