The determinants of unemployment in Malaysia: VECM model

The objective of this research is to identify the determinants which influence the unemployment in Malaysia. Besides that, this research also investigates the relationships between the determinants and the unemployment during short-run and long run. In this study, the dependent variable is the unemp...

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Main Author:	Ng, Kuang Yong
Format:	Thesis
Language:	eng eng
Published:	2020
Subjects:	HB Economic Theory
Online Access:	https://etd.uum.edu.my/10343/1/permission%20to%20use-%20ALLOWED.pdf https://etd.uum.edu.my/10343/2/s825934_01.pdf
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id	my-uum-etd.10343
record_format	uketd_dc
spelling	my-uum-etd.103432023-03-01T04:29:07Z The determinants of unemployment in Malaysia: VECM model 2020 Ng, Kuang Yong Abu Bakar, Abu Sufian School of Economics, Finance & Banking School of Economics, Finance & Banking HB Economic Theory The objective of this research is to identify the determinants which influence the unemployment in Malaysia. Besides that, this research also investigates the relationships between the determinants and the unemployment during short-run and long run. In this study, the dependent variable is the unemployment while the selected determinants which including the GDP growth, foreign direct investment, inflation, interest rate and exchange rate. The quarterly time series data which from first quarter (Q1) 2010 to first quarter (Q1) 2020 are employed in this study. The data are obtained from Bank Negara Malaysia and Ministry of Finance. Regarding the estimation, this study applied the Vector Error Correction Model (VECM) and the Fully Modified Ordinary Least Square (FMOLS). The short run results reveal that all the variables except foreign direct investment have a positive relationship with unemployment. Meanwhile, foreign direct investment will reduce the unemployment during short run. However, only the positive relationship from the GDP growth and the negative relationship from the foreign direct investment are significant. In term of long run, the VECM result portrays that there is a significant negative relationship from the GDP growth to unemployment. Furthermore, foreign direct investment and interest rate have a significant positive long-run relationship with unemployment. Regarding the inflation, the positive relationship from inflation to unemployment is not significant. Subsequently, FMOLS results demonstrate that exchange rate has a significant positive long-run relationship with unemployment. Apart from that, the Granger causality test claims that there is a unidirectional causality from selected determinants to unemployment except exchange rate. Hence, government should implement some effective policies including the expansionary fiscal policy and monetary policy, protective policy and exchange rate control in purpose to reduce the unemployment in Malaysia, especially during this post-Covid-19 pandemic period 2020 Thesis https://etd.uum.edu.my/10343/ https://etd.uum.edu.my/10343/1/permission%20to%20use-%20ALLOWED.pdf text eng staffonly https://etd.uum.edu.my/10343/2/s825934_01.pdf text eng public other masters Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Abu Bakar, Abu Sufian
topic	HB Economic Theory
spellingShingle	HB Economic Theory Ng, Kuang Yong The determinants of unemployment in Malaysia: VECM model
description	The objective of this research is to identify the determinants which influence the unemployment in Malaysia. Besides that, this research also investigates the relationships between the determinants and the unemployment during short-run and long run. In this study, the dependent variable is the unemployment while the selected determinants which including the GDP growth, foreign direct investment, inflation, interest rate and exchange rate. The quarterly time series data which from first quarter (Q1) 2010 to first quarter (Q1) 2020 are employed in this study. The data are obtained from Bank Negara Malaysia and Ministry of Finance. Regarding the estimation, this study applied the Vector Error Correction Model (VECM) and the Fully Modified Ordinary Least Square (FMOLS). The short run results reveal that all the variables except foreign direct investment have a positive relationship with unemployment. Meanwhile, foreign direct investment will reduce the unemployment during short run. However, only the positive relationship from the GDP growth and the negative relationship from the foreign direct investment are significant. In term of long run, the VECM result portrays that there is a significant negative relationship from the GDP growth to unemployment. Furthermore, foreign direct investment and interest rate have a significant positive long-run relationship with unemployment. Regarding the inflation, the positive relationship from inflation to unemployment is not significant. Subsequently, FMOLS results demonstrate that exchange rate has a significant positive long-run relationship with unemployment. Apart from that, the Granger causality test claims that there is a unidirectional causality from selected determinants to unemployment except exchange rate. Hence, government should implement some effective policies including the expansionary fiscal policy and monetary policy, protective policy and exchange rate control in purpose to reduce the unemployment in Malaysia, especially during this post-Covid-19 pandemic period
format	Thesis
qualification_name	other
qualification_level	Master's degree
author	Ng, Kuang Yong
author_facet	Ng, Kuang Yong
author_sort	Ng, Kuang Yong
title	The determinants of unemployment in Malaysia: VECM model
title_short	The determinants of unemployment in Malaysia: VECM model
title_full	The determinants of unemployment in Malaysia: VECM model
title_fullStr	The determinants of unemployment in Malaysia: VECM model
title_full_unstemmed	The determinants of unemployment in Malaysia: VECM model
title_sort	determinants of unemployment in malaysia: vecm model
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2020
url	https://etd.uum.edu.my/10343/1/permission%20to%20use-%20ALLOWED.pdf https://etd.uum.edu.my/10343/2/s825934_01.pdf
_version_	1776103795731726336

The determinants of unemployment in Malaysia: VECM model

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