Is the current economic performance compatible with the projected NDP unemployment target?

Figures & data

Table 1. Description of variables.

Variables and Presentation	Unit of measure	Source	Expected sign
Dependent variables
Unemployment Rate (Un)	%	FRED
Independent variables
Output (Y)	Rands	Easy Data	Negative (Okun’s Law)
Exchange rate (Ex)	Rand vs. USD	Easy Data	Negative
Consumer price index (CPI)	Rands	IMF	Negative (Philips curve)

Source: Authors Compilation.

Figure 1. Unemployment and economic growth in SA.

Source: Compiled by the Authors using the data extracted from World Bank.

Table 2. Descriptive statistics.

	UN	GDP	EX	CPI
Mean	25.71338	750581.2	9.998402	108.0481
Std. Dev.	2.861302	358485.6	3.274841	35.06366
Skewness	1.319765	0.138095	0.582362	0.336010
Kurtosis	5.065655	1.653686	1.948039	1.789746
Jarque-Bera	41.19151	6.925760	9.031746	7.026528
Probability	0.000000	0.031339	0.010934	0.029799
Observations	88	88	88	88

Source: Estimation.

Table 3. Unit Root.

	Augmented Dickey-Fuller (ADF)			Philips Perron (PP)
Series	I (0)	I (1)	Order	I (0)	I (1)	order
Un	0.567	−9.865***	I (1)	−2.097	13.015***	I (1)
Y	13.33***	–	I (0)	−14.459***	–	I (0)
Ex	−0.855	−7.074***	I (1)	−1.977	−6.992***	1(1)
CPI	2.458	−5.852***	I (1)	−1.129	−6.632***	I (1)

Note. *** imply 1%, ** 5%, and * 10% significant levels. The figures in brackets are standard errors.

Source: Estimation.

Table 4. Cointegration-bound test.

Function:
($\mathit{\text{Un}}=f(Y^{+},Y^{-},{\mathit{\text{EX}}}^{+},{\mathit{\text{EX}}}^{-},{\mathit{\text{CPI}}}^{+},{\mathit{\text{CPI}}}^{-})$	F Stat	Lower Bound	Upper Bound
	6.06	2.12*	3.23*
		2.45**	3.61**
		3.15***	4.43***

Note. *** implies 1%, ** 5%, and * 10% significant levels. The figures in brackets are standard errors.

Source: Estimation.

Table 5. ARDL Long-run relation.

Variable [AIC: 4.3.4.2.0.0.4]	Coefficient	Std. Error	t-Statistic	Prob
GDP_POS	−1.541965	0.740517	−2.082282	0.0417
GDP_NEG	−1.829093	0.756940	−2.416430	0.0188
CPI_POS	−0.214835	0.098042	−2.191263	0.0324
CPI_NEG	5.052215	0.930601	5.428979	0.0000
EX_POS	0.989952	0.370604	2.671184	0.0098
EX_NEG	−0.400621	0.359100	−1.115626	0.2691
C	27.62614	1.019172	27.106467	0.0000
Long-run Asymmetry ${\beta }^{+}={\beta }^{-}$	F. Stat	Prob	Conclusion
GDP	5.624987	0.0202	Long-run asymmetry
EX	53.25471	0.0000	Long-run asymmetry
CPI	39.67162	0.0000	Long-run asymmetry

Source: Estimation.

Table 6. Robustness check results.

Variable [AIC: 6.4.0.6]	Coefficient	Standard error	t-stat	P-values
GDP-GAP	−1.105614	0.155023	−7.131923	0.0000
CPI	−0.178801	0.062865	−2.844229	0.0061
EX	1.507344	0.538087	2.801302	0.0068
C	11.779891	1.254511	9.390026	0.0000
@TREND	0.009665	0.004675	2.067134	0.0430
R-squared	0.9217
Adjusted R-squared	0.8961
F-stat	35.9333
P-value	0.0000
Durbin-Watson stat	2.14

Source: Estimation Results.

Table 7. Short-run error correction model.

Variable	Coefficients
D(GDP_POS(-1))	1.1460
D(GDP_NEG(-1))	1.0920
D(CPI_POS(-1))	−0.0949 [0.1260] **
D(CPI_NEG(-1))	2.2308 [0.4372] ***
D(EX_POS(-1))	0.4903 [0.2695] *
CointEq (-1) *	−0.44 [0.0823] ***

Note. *** implies 1%, ** 5%, and * 10% significant levels. The figures in brackets are standard errors.

Source: Estimation.

Table 8. Diagnostic tests.

Diagnostic Tests	F-statistic	P-value
Heteroskedasticity Test	2.479966	0.0511
Breusch-Godfrey Serial Correlation LM Test:	1.461127	0.2266
Ramsey RESET Test	1.645520	0.1760
Jarque-Bera	3.4998	0.1738

Source: Estimation.

Table

Function:
($\mathit{\text{Un}}=f(\mathrm{\text{Un}},\mathrm{\text{CPI}},\mathrm{\text{EX}},\mathrm{\text{GDP}}\_\mathrm{\text{GAP}})$	F Stat	Lower Bound	Upper Bound
	4.5488	3.47*	4.45*
		4.01**	5.07**
		5.17***	6.36***
Diagnostic Tests	F-statistic	P-value
Heteroskedasticity Test	1.5638	0.0928
Breusch-Godfrey Serial Correlation LM Test:	0.9016	0.4114
Ramsey RESET Test	2.3441	0.1310
Jarque-Bera	0.012261	0.9938