The Validity of the Phillips Curve Relationship: An Econometric Study on Moroccan Data

The Phillips curve is a key tool in the formulation of economic policies. The primary objective of this study is to examine the validity of this curve in the Moroccan context. To this end, we employ an ARDL model, applied to annual data covering the period from 1991 to 2023. The results reveal a co-integration relationship, indicating a stable and long-term link between inflation and unemployment. However, contrary to the classical predictions of the Phillips curve, the analysis shows a significant positive impact of inflation on unemployment: a 1% increase in unemployment leads to a 1.22% rise in inflation in the short term, and 1.51% in the long term. These findings challenge the applicability of the Phillips curve in Morocco, highlighting that local economic dynamics deviate from the traditional trade-off between inflation and unemployment. This divergence underscores the urgent need to redefine Morocco's economic policies by adopting integrated and balanced monetary and fiscal strategies to effectively address these two major challenges.