The Relationship Between Unemployment and Inflation in Vietnam: Does the Phillips Curve Exist?

The relationship between unemployment and inflation is one of the important research topics in economics for improving the effectiveness of the macroeconomic policymaking process. However, there are few study results on this topic in Vietnam, an Asian developing country that has a high economic growth rate. This paper aims to clarify the relationship between these two macroeconomic variables in Vietnam through the Phillips curve theory with a database collected in the period of 1992–2021. The research methodologies include the Johansen-Juselius co-integration test and the Engle-Granger error correction model. The quantitative results confirm that there was no trade-off relationship between unemployment and inflation in Vietnam in both the short run and long run. Therefore, the empirical results did not support the Phillips curve theory in the Vietnamese economy. Finally, the paper suggests some policy implications for promoting sustainable economic growth in Vietnam in the future.