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The spillover effects of economic policy uncertainty on Turkish Unemployment

Author

Listed:
  • Ahmet Güney

    (Ankara Hacı Bayram Veli University, Faculty of Economics and Administrative Sciences, Department of Labor Economics and Industrial Relations, Ankara-Türkiye)

  • Mustafa Karakuş

    (Ankara Hacı Bayram Veli University, Gölbaşı Vocational School, Department of Wholesale and Retail Sales, Ankara-Türkiye)

  • Nuriye Güneyi

    (İnönü University, Faculty of Economics and Administrative Sciences, Department of Economics, Malatya-Türkiye)

Abstract

Türkiye is a small open economy with free capital mobility; therefore, it may be subject to international transmission of economic policy uncertainty shocks. This study seeks to determine whether foreign economic policy uncertainties drive unemployment fluctuations in Türkiye. We investigate the spillover effects of global and regional economic policy uncertainty indexes and local variables on the Turkish labour market. The study’s main findings show that unemployment is the highest net information receiver under full and rolling sample analysis. The findings also indicate that United States policy uncertainty affects interest rates and inflation through the capital channel. In contrast, European Union and Germany-induced effects affect industrial production and unemployment through the trade channel. The effect of policy uncertainty in EU countries is stronger on unemployment. Local factors influence unemployment more than global factors. Taking steps to control local factors would be beneficial for employment continuity by policymakers.

Suggested Citation

  • Ahmet Güney & Mustafa Karakuş & Nuriye Güneyi, 2024. "The spillover effects of economic policy uncertainty on Turkish Unemployment," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 11(2), pages 226-241, July.
    • Handle: RePEc:ist:iujepr:v:11:y:2024:i:2:p:226-241
    DOI: xxxx
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    References listed on IDEAS

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    1. He, Feng & Wang, Ziwei & Yin, Libo, 2020. "Asymmetric volatility spillovers between international economic policy uncertainty and the U.S. stock market," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    2. Buket Alkan & Serkan Cicek, 2020. "Spillover effect in financial markets in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 20(2), pages 53-64.
    3. Xiuwen Chen & Xiaolei Sun & Jun Wang, 2019. "Dynamic Spillover Effect Between Oil Prices and Economic Policy Uncertainty in BRIC Countries: A Wavelet-Based Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(12), pages 2703-2717, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic policy uncertainty (EPU); Spillover effects; Unemployment; Labour market JEL Classification : J101 ; E44 ; J64 ; E32;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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