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Oil prices and unemployment in the UK before and after the crisis: A Bayesian VAR approach. A note

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  • Cuestas, Juan Carlos
  • Ordóñez, Javier

Abstract

The aim of this paper is to analyse the role of oil price movements in the evolution of unemployment in the UK, accounting for asymmetric effects. Distinguishing between positive and negative innovations in oil prices allows us to provide policy insights. Estimating Bayesian SVARs, we find that the relationship between oil prices and unemployment in the UK differs before and after the beginning of the Great Recession. We also find that negative oil price innovations have contributed positively to preventing further rises in unemployment after the start of the crisis in 2008.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:phsmap:v:510:y:2018:i:c:p:200-207
    DOI: 10.1016/j.physa.2018.06.114
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    References listed on IDEAS

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    Cited by:

    1. 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).
    2. Juan Carlos Cuestas & Merike Kukk, 2019. "Are there asymmetries in the interaction between housing prices and housing credit? Evidence from a country with rapid credit accumulation," Working Papers 2019/06, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Kashif Islam & Ahmad Raza Bilal & Syed Anees Haider Zaidi, 2022. "Symmetric and asymmetric nexus between economic freedom and stock market development in Pakistan," Economic Change and Restructuring, Springer, vol. 55(4), pages 2391-2421, November.
    4. Ueda, Renan Mitsuo & Souza, Adriano Mendonça & Menezes, Rui Manuel Campilho Pereira, 2020. "How macroeconomic variables affect admission and dismissal in the Brazilian electro-electronic sector: A VAR-based model and cluster analysis," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 557(C).
    5. 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.
    6. 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).
    7. Abdulmohsen Alfalih, Abdullah & Bel Hadj, Tarek, 2021. "Asymmetric effects of foreign direct investment on employment in an oil producing country: Do human capital, institutions and oil rents matter?," Resources Policy, Elsevier, vol. 70(C).
    8. César Castro & Rebeca Jiménez-Rodríguez, 2020. "Dynamic interactions between oil price and exchange rate," PLOS ONE, Public Library of Science, vol. 15(8), pages 1-20, August.
    9. Marchese, Malvina & Kyriakou, Ioannis & Tamvakis, Michael & Di Iorio, Francesca, 2020. "Forecasting crude oil and refined products volatilities and correlations: New evidence from fractionally integrated multivariate GARCH models," Energy Economics, Elsevier, vol. 88(C).
    10. 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).
    11. 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).

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    More about this item

    Keywords

    Oil prices; Unemployment; Asymmetries; Bayesian VAR;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F15 - International Economics - - Trade - - - Economic Integration

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