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The Effects of Oil Price Changes And Exchange Rate Volatility On Unemployment: Evidence From Malaysia

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  • Mohd Shahidan Shaari

    (School of Business Innovation and Technopreneurship, Universiti Malaysia Perlis, Malaysia)

  • Nor Ermawati Hussain

    (School of Economics, Finance, and Banking, College of Business, Universiti Utara Malaysia)

  • Hafizah Abdul Rahim

    (School of Business Innovation and Technopreneurship, Universiti Malaysia Perlis, Malaysia)

Abstract

The study aims to examine the effects of oil price and exchange rate on unemployment in Malaysia. The empirical analysis commence by analyzing the time series property of data. The Johansen VAR-based co-integration technique was applied to examine the long run relationship between exchange rate, oil price and unemployment and found the long run relationship does exist. The vector error correction model was performed to check the short run dynamics and found that the short run dynamics are influenced by the estimated long run equilibrium. Granger causality was done and found that oil price does not affect unemployment but exchange rate has an influence on unemployment. Therefore, putting the exchange rate under control should be implemented to control unemployment.

Suggested Citation

  • Mohd Shahidan Shaari & Nor Ermawati Hussain & Hafizah Abdul Rahim, 2013. "The Effects of Oil Price Changes And Exchange Rate Volatility On Unemployment: Evidence From Malaysia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 2(4), pages 72-83, October.
    • Handle: RePEc:rbs:ijbrss:v:2:y:2013:i:4:p:72-83
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    References listed on IDEAS

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    7. Feldmann, Horst, 2011. "The unemployment effect of exchange rate volatility in industrial countries," Economics Letters, Elsevier, vol. 111(3), pages 268-271, June.
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    Cited by:

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