The Role of Regulatory Quality in Testing Phillips Curve: A Case of Selected Asian Economies

Abstract

Inflation is among one of the major macroeconomic challenges of present time. The inflation has adversely affected the buying power of people. This research is conducted to see the roles of unemployment, regulatory quality, total natural resource rent and population density upon inflation, which will help in testing relevance of conventional Phillips curve. This study considers the cross-sectional autoregressive distributed technique over the period from 1990 to 2024 and provides evidence of trade-off between unemployment and inflation. These findings provide evidence of Conventional Phillips curve in selected Asian Economies. Moreover, the findings also highlight that rents from natural resources significantly accelerate inflation while regulatory quality as measure of institutional quality reduces inflation. Based on these findings, the research proposes that natural rate of unemployment may be reduced, rents from natural` resource may be increased and quality of regulations are improved in such a way that it should not trigger inflation in selected sample countries.