IDEAS home Printed from https://ideas.repec.org/p/mar/magkse/201931.html
   My bibliography  Save this paper

Oil Price Shocks and Unemployment Rate: New Evidence from the MENA Region

Author

Listed:
  • Iman Cheratian

    (Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University (TMU))

  • Mohammad Reza Farzanegan

    (Philipps-Universitaet Marburg)

  • Saleh Goltabar

    (Economics Research Group, Academic Center for Education, Culture, and Research (ACECR), Tarbiat Modares University (TMU))

Abstract

We examine the effects of oil price shocks on unemployment rates in the MENA oil-exporting and oil-importing countries over the period 1991-2017. Using the nonlinear autoregressive distributed lag (NARDL) model, the results show that in the short-run, the positive changes of oil prices only exert a positive (increasing) impact on the unemployment rate for oil-exporting countries. However, in the long-run, positive changes in oil prices have a significant increasing effect on the unemployment rate for oil-exporting and oil-importing countries in the MENA region. We also find that the negative changes in oil prices do not show a significant effect on the unemployment rate. Our findings are in line with predictions of the Dutch disease hypothesis.

Suggested Citation

  • Iman Cheratian & Mohammad Reza Farzanegan & Saleh Goltabar, 2019. "Oil Price Shocks and Unemployment Rate: New Evidence from the MENA Region," MAGKS Papers on Economics 201931, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201931
    as

    Download full text from publisher

    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/paper_2019/31-2019_cheratian.pdf
    File Function: First 201931
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ali Said, 2015. "The Influence of Oil Prices on Islamic Banking Efficiency Scores during the Financial Crisis: Evidence from the MENA Area," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 4(3), pages 35-43, July.
    2. Alan A. Carruth & Mark A. Hooker & Andrew J. Oswald, 1998. "Unemployment Equilibria And Input Prices: Theory And Evidence From The United States," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 621-628, November.
    3. Cuestas, Juan Carlos & Ordóñez, Javier, 2018. "Oil prices and unemployment in the UK before and after the crisis: A Bayesian VAR approach. A note," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 510(C), pages 200-207.
    4. Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
    5. Löschel Andreas & Oberndorfer Ulrich, 2009. "Oil and Unemployment in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 146-162, April.
    6. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    7. Pegg, Scott, 2010. "Is there a Dutch disease in Botswana?," Resources Policy, Elsevier, vol. 35(1), pages 14-19, March.
    8. Amjad M. Kisswani & Khalid M. Kisswani, 2019. "Modeling the employment–oil price nexus: A non-linear cointegration analysis for the U.S. market," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(7), pages 902-918, October.
    9. Michieka, Nyakundi M. & Gearhart, Richard, 2015. "Oil price fluctuations and employment in Kern County: A Vector Error Correction approach," Energy Policy, Elsevier, vol. 87(C), pages 584-590.
    10. Hussein Mohammad Salameh & Bashar Al-Zu'bi; & Khaled Abdelal Al-Zubi & Ihab Khaled Magableh, 2012. "Oil price and stock market index in exporting and importing countries: evidence from MENA," American Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 2(4), pages 363-379.
    11. Bouri, Elie, 2015. "Oil volatility shocks and the stock markets of oil-importing MENA economies: A tale from the financial crisis," Energy Economics, Elsevier, vol. 51(C), pages 590-598.
    12. Davis, Steven J. & Haltiwanger, John, 2001. "Sectoral job creation and destruction responses to oil price changes," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 465-512, December.
    13. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    14. Nouira, Ridha & Hadj Amor, Thouraya & Rault, Christophe, 2019. "Oil price fluctuations and exchange rate dynamics in the MENA region: Evidence from non-causality-in-variance and asymmetric non-causality tests," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 159-171.
    15. Hamilton, James D, 1988. "A Neoclassical Model of Unemployment and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 593-617, June.
    16. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    17. M. Hakan Berument & Nildag Basak Ceylan & Nukhet Dogan, 2010. "The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 149-176.
    18. Nusair, Salah A., 2016. "The effects of oil price shocks on the economies of the Gulf Co-operation Council countries: Nonlinear analysis," Energy Policy, Elsevier, vol. 91(C), pages 256-267.
    19. Mohammad Reza Farzanegan & Marcel Thum, 2020. "Does oil rents dependency reduce the quality of education?," Empirical Economics, Springer, vol. 58(4), pages 1863-1911, April.
    20. Farzanegan, Mohammad Reza & Witthuhn, Stefan, 2017. "Corruption and political stability: Does the youth bulge matter?," European Journal of Political Economy, Elsevier, vol. 49(C), pages 47-70.
    21. Nicholas Apergis & Ghassen El Montasser & Emmanuel Owusu-Sekyere & Ahdi N. Ajmi & Rangan Gupta, 2014. "Dutch Disease Effect of Oil Rents on Agriculture Value Added in MENA Countries," Working Papers 201408, University of Pretoria, Department of Economics.
    22. Ahdi Noomen Ajmi & Ghassen El-montasser & Shawkat Hammoudeh & Duc Khuong Nguyen, 2014. "Oil prices and MENA stock markets: new evidence from nonlinear and asymmetric causalities during and after the crisis period," Applied Economics, Taylor & Francis Journals, vol. 46(18), pages 2167-2177, June.
    23. Sweder van Wijnbergen, 1984. "Inflation, Employment, and the Dutch Disease in Oil-Exporting Countries: A Short-Run Disequilibrium Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(2), pages 233-250.
    24. Hyunjoo Kim Karlsson & Yushu Li & Ghazi Shukur, 2018. "The Causal Nexus between Oil Prices, Interest Rates, and Unemployment in Norway Using Wavelet Methods," Sustainability, MDPI, vol. 10(8), pages 1-15, August.
    25. Bjorvatn, Kjetil & Farzanegan, Mohammad Reza, 2013. "Demographic Transition in Resource Rich Countries: A Blessing or a Curse?," World Development, Elsevier, vol. 45(C), pages 337-351.
    26. Mohamad B. Karaki, 2018. "Asymmetries In The Responses Of Regional Job Flows To Oil Price Shocks," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1827-1845, July.
    27. Apergis, Nicholas & El-Montasser, Ghassen & Sekyere, Emmanuel & Ajmi, Ahdi N. & Gupta, Rangan, 2014. "Dutch disease effect of oil rents on agriculture value added in Middle East and North African (MENA) countries," Energy Economics, Elsevier, vol. 45(C), pages 485-490.
    28. Andreopoulos Spyros, 2009. "Oil Matters: Real Input Prices and U.S. Unemployment Revisited," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-31, March.
    29. repec:ipg:wpaper:2014-079 is not listed on IDEAS
    30. Salisu, Afees A. & Isah, Kazeem O., 2017. "Revisiting the oil price and stock market nexus: A nonlinear Panel ARDL approach," Economic Modelling, Elsevier, vol. 66(C), pages 258-271.
    31. Edward F. Blackburne III & Mark W. Frank, 2007. "Estimation of nonstationary heterogeneous panels," Stata Journal, StataCorp LP, vol. 7(2), pages 197-208, June.
    32. Uri, Noel D., 1996. "Changing crude oil price effects on US agricultural employment," Energy Economics, Elsevier, vol. 18(3), pages 185-202, July.
    33. Herrera, Ana María & Karaki, Mohamad B. & Rangaraju, Sandeep Kumar, 2017. "Where do jobs go when oil prices drop?," Energy Economics, Elsevier, vol. 64(C), pages 469-482.
    34. Farzanegan, Mohammad Reza & Markwardt, Gunther, 2009. "The effects of oil price shocks on the Iranian economy," Energy Economics, Elsevier, vol. 31(1), pages 134-151, January.
    35. Kandemir Kocaaslan, Ozge, 2019. "Oil price uncertainty and unemployment," Energy Economics, Elsevier, vol. 81(C), pages 577-583.
    36. Mohamad B. Karaki, 2018. "Oil Prices and State Unemployment Rates," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    37. Hamilton, James D, 1983. "Oil and the Macroeconomy since World War II," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 228-248, April.
    38. Devarajan, Shantayanan & Le, Tuan Minh & Raballand, Gael, 2010. "Increasing public expenditure efficiency in oil-rich economies : a proposal," Policy Research Working Paper Series 5287, The World Bank.
    39. Ordóñez, Javier & Monfort, Mercedes & Cuestas, Juan Carlos, 2019. "Oil prices, unemployment and the financial crisis in oil-importing countries: The case of Spain," Energy, Elsevier, vol. 181(C), pages 625-634.
    40. Luis Gil-Alana, 2003. "Unemployment and real oil prices in Australia: a fractionally cointegrated approach," Applied Economics Letters, Taylor & Francis Journals, vol. 10(4), pages 201-204.
    41. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    42. Aktham Maghyereh & Basel Awartani, 2016. "Oil price uncertainty and equity returns," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 8(1), pages 64-79, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Isiaka Akande Raifu & Alarudeen Aminu & Abiodun O. Folawewo, 2020. "Investigating the relationship between changes in oil prices and unemployment rate in Nigeria: linear and nonlinear autoregressive distributed lag approaches," Future Business Journal, Springer, vol. 6(1), pages 1-18, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kocaarslan, Baris & Soytas, Mehmet Ali & Soytas, Ugur, 2020. "The asymmetric impact of oil prices, interest rates and oil price uncertainty on unemployment in the US," Energy Economics, Elsevier, vol. 86(C).
    2. Zhang, Xi-Xi & Liu, Lu, 2020. "The time-varying causal relationship between oil price and unemployment: Evidence from the U.S. and China (EGY 118745)," Energy, Elsevier, vol. 212(C).
    3. Wang, Kai-Hua & Liu, Lu & Li, Xin & Oana-Ramona, Lobonţ, 2022. "Do oil price shocks drive unemployment? Evidence from Russia and Canada," Energy, Elsevier, vol. 253(C).
    4. Nusair, Salah A., 2020. "The asymmetric effects of oil price changes on unemployment: Evidence from Canada and the U.S," The Journal of Economic Asymmetries, Elsevier, vol. 21(C).
    5. Nusair, Salah A., 2019. "Oil price and inflation dynamics in the Gulf Cooperation Council countries," Energy, Elsevier, vol. 181(C), pages 997-1011.
    6. Salisu, Afees A. & Ndako, Umar B., 2018. "Modelling stock price–exchange rate nexus in OECD countries: A new perspective," Economic Modelling, Elsevier, vol. 74(C), pages 105-123.
    7. Nabil Alimi & Nabil Aflouk, 2017. "The threshold effect of oil-price shocks on economic growth," Economics Bulletin, AccessEcon, vol. 37(3), pages 1942-1958.
    8. Ordóñez, Javier & Monfort, Mercedes & Cuestas, Juan Carlos, 2019. "Oil prices, unemployment and the financial crisis in oil-importing countries: The case of Spain," Energy, Elsevier, vol. 181(C), pages 625-634.
    9. Michieka, Nyakundi M. & Gearhart, Richard S., 2019. "Oil price dynamics and sectoral employment in the U.S," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 140-149.
    10. Akinlo A. Enisan, 2020. "Asymmetric impacts of oil price shocks on unemployment: Evidence from Nigeria," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(1), pages 63-78, June.
    11. Ben-Salha, Ousama & Dachraoui, Hajer & Sebri, Maamar, 2021. "Natural resource rents and economic growth in the top resource-abundant countries: A PMG estimation," Resources Policy, Elsevier, vol. 74(C).
    12. Cuestas, Juan Carlos & Gil-Alana, Luis A., 2018. "Oil price shocks and unemployment in Central and Eastern Europe," Economic Systems, Elsevier, vol. 42(1), pages 164-173.
    13. Salisu, Afees A. & Isah, Kazeem O., 2017. "Revisiting the oil price and stock market nexus: A nonlinear Panel ARDL approach," Economic Modelling, Elsevier, vol. 66(C), pages 258-271.
    14. Chen, Natalie & Graham, Liam & Oswald, Andrew J, 2007. "Oil Prices, Profits, and Recessions : An Inquiry Using Terrorism as an Instrumental Variable," The Warwick Economics Research Paper Series (TWERPS) 809, University of Warwick, Department of Economics.
    15. Awartani, Basel & Maghyereh, Aktham & Ayton, Julie, 2020. "Oil price changes and industrial output in the MENA region: Nonlinearities and asymmetries," Energy, Elsevier, vol. 196(C).
    16. Bakry, Walid & Nghiem, Xuan-Hoa & Farouk, Sherine & Vo, Xuan Vinh, 2023. "Does it hurt or help? Revisiting the effects of ICT on economic growth and energy consumption: A nonlinear panel ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 597-617.
    17. Dogrul, H. Günsel & Soytas, Ugur, 2010. "Relationship between oil prices, interest rate, and unemployment: Evidence from an emerging market," Energy Economics, Elsevier, vol. 32(6), pages 1523-1528, November.
    18. María Isabel Rodríguez-Ferradas & José A. Alfaro-Tanco & Francesco Sandulli, 2016. "A framework for Open Innovation practices: Typology and characterisation," Faculty Working Papers 02/16, School of Economics and Business Administration, University of Navarra.
    19. Nusair, Salah A. & Olson, Dennis, 2021. "Asymmetric oil price and Asian economies: A nonlinear ARDL approach," Energy, Elsevier, vol. 219(C).
    20. Rajesh H. Acharya & Anver C. Sadath, 2018. "Revisiting the relationship between oil price and macro economy: Evidence from India," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2018(1), pages 173-190.

    More about this item

    Keywords

    Oil price shocks; Unemployment rate; MENA region; NARDL;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mar:magkse:201931. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bernd Hayo (email available below). General contact details of provider: https://edirc.repec.org/data/vamarde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.