Resumen de Oil price shocks and unemployment rate persistence in the G7 countries: A fractional cointegration VAR approach

Rachid Benkhelouf, Imane Said

• This study addresses the limited understanding of how oil price shocks influence unemployment dynamics across advanced economies by analyzing the relationship between oil prices and unemployment rates in G7 countries from 1991 to 2023. Using fractional integration and fractional cointegration methodologies, the study provides new evidence on the degree of persistence in unemployment in response to oil shocks. The findings reveal that the impact of these shocks differs significantly across countries: while the United Kingdom and France exhibit short-lived effects, Canada, Italy, Japan, Germany, and the United States experience more persistent impacts, underscoring the heterogeneous effectiveness of fiscal and labor market policies. Key contributions include applying long-memory econometric techniques to disentangle structural from cyclical effects and offering country-specific insights into shock absorption capacities. The novelty of the study lies in its methodological rigor and its policy relevance in guiding the design of resilient and flexible economic policies to mitigate the adverse effects of oil price volatility on employment.