Investigating the effects of government expenditure and money supply on unemployment in Namibia
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Date
2020
Authors
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Journal ISSN
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Publisher
University of Namibia
Abstract
Over the years, Namibia continue to experienced rapid growth of unemployment. The purpose of this study is to investigate the effects of government expenditure and money supply on unemployment in Namibia. The annual data employed in the study covered the period from 1980 to 2018. The study applied the ARDL or bound cointegration approach which is said to be more appropriate for the estimation of small sample studies and variable combination of the order of integration (I (0) and I (1)). Granger causality tests were also performed in the study to establish existence of causality between the variables used in the models. The empirical results established cointegration relations between unemployment, government expenditure, money supply and inflation in Namibia. The results further indicated that both government expenditure and money supply have an impact on unemployment in the country. A negative and statistically significant at 5 per cent relationship was observed between government expenditure and unemployment as well as between money supply and unemployment at 10 per cent level of significant. Evidence of short-run causality between government expenditure and unemployment as well as between money supply and unemployment was also found. Finally, the study recommends that for an effective combat of the unemployment problem in Namibia, there is a need for the government to focus on investment, employment generation and provide basic business enhancing facilities such as stable power supply, water and operational facilities to trickle down to the masses.
Description
A thesis submitted in partial fulfilment of the requirements for the Degree of Master of Science in Economics
Keywords
Government expenditure, Money suppy, Unemployment