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Examining the Correlation between Gold Price Fluctuations and Unemployment Levels in the Context of Green Transition: Insights from Time Series Analysis and Granger Causality

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  • Gergana Taneva-Angelova

    (Department of Finance and Accounting, University of Plovdiv Paisii Hilendarski)

  • Stefan Raychev

    (Department of Economic Science, University of Plovdiv Paisii Hilendarski)

Abstract

This article tackles the complex task of establishing a correlation between the volatility in gold prices and levels of unemployment, while considering the emerging influences of green economics and the green transition. We employ regression analysis, cluster analysis, time series, and Granger causality to investigate the relationship between gold prices?a traditional safe-haven asset and alternative income source?and unemployment rates, particularly during periods of economic uncertainty. As economies shift toward sustainable development, green investments are altering traditional economic dynamics, potentially affecting the role of gold as a security asset.This empirical study tracks these interactions from 2019 to 2024, using data from the EU27. This period encompasses significant economic and geopolitical challenges?including the COVID-19 crisis, military actions in Ukraine, and inflationary pressures?as well as a stronger emphasis on green transition policies. Central banks have responded by increasing interest rates, enhancing the appeal of investment assets such as bonds and gold. Meanwhile, labor markets have experienced disruptions, with evolving employment patterns due to the green transition and heightened unemployment across European countries.

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  • Gergana Taneva-Angelova & Stefan Raychev, 0000. "Examining the Correlation between Gold Price Fluctuations and Unemployment Levels in the Context of Green Transition: Insights from Time Series Analysis and Granger Causality," Proceedings of Economics and Finance Conferences 15016513, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:15016513
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    References listed on IDEAS

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    1. Blose, Laurence E., 2010. "Gold prices, cost of carry, and expected inflation," Journal of Economics and Business, Elsevier, vol. 62(1), pages 35-47, January.
    2. Baur, Dirk G. & Beckmann, Joscha & Czudaj, Robert L., 2020. "The Relative Valuation Of Gold," Macroeconomic Dynamics, Cambridge University Press, vol. 24(6), pages 1346-1391, September.
    3. Burdekin, Richard C.K. & Tao, Ran, 2021. "The golden hedge: From global financial crisis to global pandemic," Economic Modelling, Elsevier, vol. 95(C), pages 170-180.
    4. Arslanalp, Serkan & Eichengreen, Barry & Simpson-Bell, Chima, 2023. "Gold as international reserves: A barbarous relic no more?," Journal of International Economics, Elsevier, vol. 145(C).
    5. Aye, Goodness C. & Chang, Tsangyao & Gupta, Rangan, 2016. "Is gold an inflation-hedge? Evidence from an interrupted Markov-switching cointegration model," Resources Policy, Elsevier, vol. 48(C), pages 77-84.
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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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