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Oil and Unemployment in Germany

  • Andreas Löschel

    ()

    (ZEW Mannheim)

  • Ulrich Oberndorfer

    ()

    (Federal Ministry of Economics and Technology)

In this paper, we analyze oil price impacts on unemployment for Germany. Firstly, we survey theoretical and empirical literature on the oil-unemployment relationship and relate them to the German case. Secondly, we illustrate this issue within the framework of a vector autoregression (VAR) approach for Germany. For this purpose,we use three different specifications in order to adequately address the uncertainty related to the construction of an adequate oil variable. Using monthly data from 1973 to 2008, we show that oil price increases induce a rise in unemployment in the German labor market.Moreover, for a restricted sample period for postunification Germany, we oppose claims that the oil to macroeconomy relationship has weakened since the 1980s. However, our results suggest that it has become more important to construct adequate measures of oil price variables.

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Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 229 (2009)
Issue (Month): 2-3 (June)
Pages: 146-162

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Handle: RePEc:jns:jbstat:v:229:y:2009:i:2-3:p:146-162
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