TRADE-OFF BETWEEN GLOBAL INFLATION AND UNEMPLOYMENT
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Without a doubt, parts of the macroeconomic objectives which the administration endeavors to accomplish are the upkeep of stable local value level and full-livelihood. Macroeconomic performance is judged by three wide measures-unemployment rate, inflation rate, and the development rate of yield (Ugwuanyi, 2004). Inflation and unemployment stay blazing issues in any economy. All policymakers would to a substantial degree, wish to have low rates of inflation and unemployment. It is regularly contended that a solitary digit rate of inflation and an unemployment rate of around five for each penny would guarantee macroeconomic solidness in an economy taking all things into account, Aminu and Anono (2012). Macroeconomic strength is vital for development, arranging and improvement, consequently the allure of looking at the development of other financial basics if the objective of soundness will be accomplished.
Unemployment has been arranged as one of the genuine hindrances to social advancement. Aside from speaking to a huge misuse of a nation's labor assets, it generates welfare misfortune as far as lower yield in this way prompting lower wage and prosperity (Raheem, 1993). Inflation then again, has been a noteworthy issue in the nation throughout the years. Inflation is a family word in numerous business sector situated economies. Albeit a few people, makers, purchasers, experts, non-experts, exchange unionists, laborers and the preferences, speak as often as possible about inflation especially if the circumstance has expected a perpetual character, yet just chose few know or considerably try to think about the mechanics and results of inflation, Ajao (2004).
Inflation, which suggests the general increment in the cost level, is comprehensively a normal measure in light of the fact that anytime, costs might expand, diminishing or steady; an industrious increment in costs harms the economy, especially the poor who have practically no investment funds to pad rising costs. The normal individual in any family or family knows when the cash in his ownership can just buy less amount of merchandise and administrations than was beforehand conceivable. For the most part, financial operators (family units, private area and government) would raise an alert on the grounds that their income have declined in genuine terms because of rising costs. It is far more atrocious when vulnerability takes after cost builds, (Nwaobi, 2009).
Before the development of what got to be to be known as the unemployment and inflation exchange off or Phillips curve in 1958, unemployment and inflation were considered and regarded in financial aspects as particular subjects. Keynes for occasion portrayed inflation as the abundance of use over pay at full-occupation level. He fought that the more noteworthy the total consumption, the bigger the inflationary hole and the more fast the inflation, Dauda (2010). With respect to unemployment, the Keynesian business analysts hold that an expansion in unemployment diminishes pay, which lessens utilization, and decreases total yield. Subsequently, vocation can be expanded by expanding utilization or venture.
1.2 Statement of the Research Problem
Rising rates of unemployment and inflation portray inadmissible macroeconomic execution of the economy, a circumstance known as stagflation. A few financial specialists have contended that it is unrealistic to have low rates of inflation and unemployment as approach results, thus policymakers should choose what rate of inflation ought to be yielded for a worthy rate of unemployment. (Ekpo, 2012). Thinks about by (Garba, 2010, and Olowononi and Audu (2012), have inspected the nature and reasons for unemployment in sub Saharan Africa and discovered aggravating patterns. There are not very many studies which have been attempted with respect to the impact of unemployment on inflation in Sub Saharan Africa.
A portion of the current studies utilized essentially unmistakable insights (Olowononi and Audu (2012). Aminu and Anono, (2012), Bakare, (2012) and Rafindadi, (2012) led comparative studies and their discoveries were disputable particularly in the zone of effect of the two twin's wrongs (unemployment and inflation) on the development of the sub saharan economy. Bakare (2012) discovered negative relationship between unemployment, inflation and development, Rafindadi (2012) discovered negative non-direct relationship amongst unemployment and yield development while Aminu and Anono discovered positive relationship amongst inflation and financial development in Nigeria.
The puzzling trends of unemployment rate, and inflation rates in sub Saharan Africa and the controversial results obtained in the empirical results provide the need to examine the relationship between inflation and unemployment in sub Saharan Africa.
In the light of the foregoing analysis, the research work will be guided by the following question;
i.    Is there any relationship between inflation and unemployment in sub Saharan Africa?
ii.    What is the impact of government expenditure on unemployment in sub Saharan Africa?
iii.    What is the effect of gross domestic product on unemployment in sub Saharan Africa?
1.3     Objectives to the Study
i.    To determine the relationship between inflation and unemployment in sub Saharan Africa.
ii.    To analyze the impact of government expenditure on unemployment in sub- Saharan Africa.
iii.    To investigate the effects of gross domestic product on unemployment in sub Saharan Africa.
1.4    Research Hypotheses
Ho: There is no relationship between inflation and unemployment in sub Saharan Africa.
Ho: There is no impact of government expenditure on unemployment in sub Saharan Africa.
Ho: There is no effect of gross domestic product on unemployment in sub Saharan Africa.
1.5 Scope of the Study
This study shall focus on the empirical relationship that exists between inflation and unemployment in sub Saharan Africa. The empirical investigation shall be restricted to the period between 1990 and 2014 in Sub-Saharan Africa.
1.6 Significance and Relevance of the Study
The significance of this study lies on the fact that huge amount of resources (human and capital) are unemployed which could cause poor economic performance. This thesis will help policy makers to establish the extent of the effect of unemployment and inflation rates on economic growth. This thesis will improve the body of existing literature and also serve as a policy document. The problems of high level unemployment and inflation need to be addressed in order to improve economic growth. Therefore, this study will be of paramount importance to economic decision-makers, as it will equip them with the knowledge and skills needed to tackle the pressing issue of unemployment and inflation in our country. Also, to those who would like to carry out further research on this topic, it would be of valuable help in the course of their research.