Macroeconomic determinants of unemployment rate in Malaysia / Marie Andrea Andrew

This study investigates the relationship between unemployment rate and
macroeconomic determinants (gross domestic product, inflation, foreign direct
investment and interest rate) in Malaysia. The period of time used in this study is
from 1982 to 2017 which is total of 36 years. The methods used in this study is
Augmented Dickey Fuller (ADF) and Phillips-Perron (PP) which is to investigate the
stationary of the data. Besides that, other method used is Granger Causality Test
which the method is to examine the causality relationship between dependent variable
(unemployment rate) and independent variables (gross domestic product, inflation,
foreign direct investment and interest rate). The main finding is the independent
variables does not have effect on unemployment rate in Malaysia. From regression
analysis using Ordinary Least Square, the gross domestic product and foreign direct
investment have negative relationship with unemployment rate while inflation and
interest rate have positive relationship with unemployment rate in Malaysia.