Oil prices and unemployment in the UK before and after the crisis: A Bayesian VAR approach. A note

The aim of this paper is to analyse the role of oil price movements in the evolution of unemployment in the UK, accounting for asymmetric effects. Distinguishing between positive and negative innovations in oil prices allows us to provide policy insights. Estimating Bayesian SVARs, we find that the relationship between oil prices and unemployment in the UK differs before and after the beginning of the Great Recession. We also find that negative oil price innovations have contributed positively to preventing further rises in unemployment after the start of the crisis in 2008.