The impact of supply shocks on unemployment in Spain


  • Juan Carlos Cuestas Eesti Pank, Estonia



In this paper we aim to investigate how the relationships of falls and rises in the oil price with the unemployment rate and the equilibrium unemployment rate differ in the case of Spain. It is found that while oil price movements do not have an effect on unemployment, they do have a differential effect on the equilibrium rate of unemployment for our target country.

Author Biography

Juan Carlos Cuestas, Eesti Pank, Estonia

Senior Economist


Acurio-Vásconez, V.(2015): Oil and Unemployment in a New-Keynesian Model. Documents de Travail du Centre d’Economie de la Sorbornne no. 2015.43.

Bampinas, G. and T. Panagiotidis (2015): On the relationship between oil and gold before and after financial crisis: linear, nonlinear and time-varying causality testing. Studies in Nonlinear Dynamics and Econometrics, 19, 657-668.

Caporale, G. M. and L. Gil-Alana (2002): Unemployment and input prices: a fractional cointegration approach. Applied Economics Letters, 9, 347-351.

Carruth, A. A, M. A. Hooker and A. J. Oswald (1998): Unemployment equilibria and input prices: Theory and evidence from the United States. Review of Economics and Statistics, 80, 621-628.

Cuestas, J. C. and L. A. Gil-Alana (2016): Oil shocks on unemployment in Central and Eastern Europe, Faculty Working Papers 02/16, School of Economics and Business Administration, University of Navarra.

Estrada, A., and P. Hernández de Cos (2012): Oil prices and their effect on potential output. Applied Economics Letters, 19, 207–214.

Gil-Alana, L. A. (2003): Unemployment and real oil prices in Australia: a fractionally cointegrated approach. Applied Economics Letters, 10, 201-204.

Gil-Alana, L. A. (2006): UK Unemployment Dynamics: a Fractionally Cointegrated Approach, Economia Internazionale / International Economics, Camera di Commercio di Genova, 59, 33-50.

Hamilton, J. D. (1983): Oil and the macroeconomy since World War II. Journal of Political Economy, 91, 228-248.

Hamilton, J. D. (1988): A neoclassical model of unemployment and the business cycle. Journal of Political Economy 96, 593-617.

Jiménez-Rodríguez, R. (2009): Oil Price Shocks and Real GDP Growth: Testing for Non-Linearity. The Energy Journal, 30, 1–23.

Jiménez-Rodríguez, R. and M. Sánchez (2005): Oil Price Shocks and Real GDP Growth: Empirical Evidence for Some OECD Countries. Applied Economics, 37, 201–228.

Okun, A. M. (1962): Potential GNP: Its measurement and significance. Proceedings of the Business and Economics Statistics Section of the American Statistical Association, 98-104.

Pesaran, M.H., Y. Shin., and R. J. Smith (2001): Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326.

Shin, Y., B. Yu, M. Greenwood-Nimmo (2014): Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In: Festschrift in Honor of Peter Schmidt. Springer, 281-314.




How to Cite

Cuestas, J. C. (2016). The impact of supply shocks on unemployment in Spain. Economics and Business Letters, 5(4), 107-112.