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.
 
 

Highlights

  • The study aims to examine the effects of oil price and exchange rate on unemployment in Malaysia

  • vector error-correction model (VECM) was used to determine the effects of oil price shocks and exchange rate volatilities on unemployment rates

  • This paper investigated the relationship between oil price, exchange rate, and unemployment

Read more

Summary

Introduction

The study aims to examine the effects of oil price and exchange rate on unemployment in Malaysia. Past studies have addressed the effect of oil price and exchange rate on unemployment separately. This study aims to investigate the relationship between these two fluctuating variables (oil price and exchange rate) and unemployment in Malaysia The increase in the price of oil in 2008 attracted many economists and policy makers to study the effect of oil prices on economies. Oil price fluctuations cause many problems in an economy, such as high inflation, unemployment (Shaari, et al, 2012), and decline in GDP (Ling & Jones, 2011). Most studies agreed that oil price shocks contribute to higher unemployment rates (Dogrul & Soytas, 2010, Andreopoulos, 2006; Yau, 2010; Loschela & Oberdorferb, 2009; Jalles, 2009). A reduction in demand contributes to higher unemployment (Andreopoulos, 2006)

Objectives
Methods
Results
Conclusion
Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call