Proceedings of the International Conference of Economics, Business, and Entrepreneur (ICEBE 2022)

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Is the Phillips Curve Valid in Fintech 3.0 Era? An Error Correction Model Approach

Authors
Birgitta Dian Saraswati1, *, Widya Wahyuningrum1, Angelita Titis Pertiwi1
1Economics Development, Satya Wacana Christian University, Salatiga, Indonesia
*Corresponding author. Email: birgitta.saraswati@uksw.edu
Corresponding Author
Birgitta Dian Saraswati
Available Online 30 May 2023.
DOI
10.2991/978-2-38476-064-0_19How to use a DOI?
Keywords
financial technology (fintech); unemployment rate; inflation; granger causality; error correction model (ECM)
Abstract

The Phillips curve explains that governments’ policies to control inflation will increase unemployment rates. However, financial technology (fintech) may lead to a positive relationship between inflation and unemployment. Fintech will arguably cause low inflation and unemployment rates. This study seeks to investigate the causal relationship between inflation and unemployment before and after the fintech 3.0 era and the impact of fintech 3.0 on the relationship between inflation and unemployment in Indonesia. Using the Granger causality and error correction model (ECM) tests to analyze time series data of 1985–2020, this research empirically demonstrates a one-way causality between inflation and unemployment during the fintech 3.0 implementation in Indonesia. Further, the ECM estimation indicates unemployment rate positively and significantly affects inflation rates in the long run. Thus, optimal use of fintech technology stabilizes prices and controls unemployment rates. Financial technology creates a cashless society that controls inflation.

Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Conference of Economics, Business, and Entrepreneur (ICEBE 2022)
Series
Advances in Economics, Business and Management Research
Publication Date
30 May 2023
ISBN
978-2-38476-064-0
ISSN
2352-5428
DOI
10.2991/978-2-38476-064-0_19How to use a DOI?
Copyright
© 2023 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Birgitta Dian Saraswati
AU  - Widya Wahyuningrum
AU  - Angelita Titis Pertiwi
PY  - 2023
DA  - 2023/05/30
TI  - Is the Phillips Curve Valid in Fintech 3.0 Era? An Error Correction Model Approach
BT  - Proceedings of the International Conference of Economics, Business, and Entrepreneur (ICEBE 2022)
PB  - Atlantis Press
SP  - 170
EP  - 183
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-2-38476-064-0_19
DO  - 10.2991/978-2-38476-064-0_19
ID  - Saraswati2023
ER  -