The Impact of Inflation and Unemployment Rates on Macroeconomic Model: Statistical Evidence from Sudan

Abstract

This article aims at investigating the impact of inflation and unemployment rates on Gross Domestic Product (GDP) for an econometric model using the most frequently econometric techniques, to estimate and forecast an econometric model. Results were compared to Ordinary Least Squares( OLS) and(Two Stages Least  Squares( or Instrumental Variable method) to see if satisfactory results can be obtained. The proposed technique was applied to annual time series economic data, particularly GDP data for Sudan. The method used seemed to have little usefulness in the model; this might be due to the nature and the number of the explanatory variables under study.