Oil Price and Unemployment. A study of the relationship between crude oil prices and unemployment in the South African context

      Аннотация: Crude Oil Price and Unemployment is an empirical validation of the relationship between crude oil prices and unemployment in the South African context. Therefore, this is a study of whether an increase in crude oil prices will cause an increase in unemployment or not. Classical and Keynesian theories of unemployment are used with the efficiency wage model representing the theoretical framework. Included is also a wide range of studies based on the relationship of oil prices and the macro-economy in general, hence there were additional variables for the empirical model. Additional variables are, real GDP, real effective exchange rate and real interest rate in South Africa representing additional factors that may affect unemployment excluding crude oil prices. VAR based Johansen technique is the used econometric method for analysis. The stated hypothesis is accepted, with policy recommendations made based on the results. the conclusion is that an increase in crude oil prices increases unemployment but the opposite depends on whether it is the short run or long run.

Ключевые слова: Crude Oil Prices, South Africa, Time series data, unemployment, VaR