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CrudeOil Price and Covid19 Pandemic Shocks on Unemployment and Economic Welfare: Experience from Nigeria, South Africa, and Kenya

. Udo Emmanuel Samuel, Orugun Ibidunni Fausat, Manasseh, Charles Osondu, Abner Ishaku Prince and Abdulrahman Musa Dantala


Abstract

This paper investigates crude-oil price oil and covid-19 pandemic shocks on unemployment and economic welfare in Nigeria, South Africa, and Kenya. Using the Structural Vector Autoregressive (SVAR) model, impulse response function, and vector decomposition to analyse daily data from January 3rd, 2020 to September 23rd, 2021. The economic welfare and unemployment shock are an upshot of the pandemic, lockdown, and oil price shock effect. The SVAR model estimation revealed that oil price shock mirrors a change in the price of oil due to an unanticipated change in the oil market. The results also indicate that an increase in oil prices affect economic welfare and unemployment positively before the pandemic and negatively due to the lockdown, restrictions on economic and social movement, increase in the number of death and confirm cases. The impulse function analysis also revealed a reverse effect of oil price and covid-19 shock on unemployment and economic welfare. The demand side effect revealed a mix of the effect of the pandemic and oil price shock on economic welfare and the unemployment rate. The Johansen cointegration test shows the existence of long-run nexus in the series. Indicating that an increase/decrease in oil prices and covid-19 death cases has a proportional influence on economic welfare and unemployment rate. The study recommends investment in non-oil sectors and annual stimulus budget allocation for future pandemics and unforeseen economic and health crises. To cushion and mitigate future vicissitude of oil shocks.

 

Keywords: Covid-19 Pandemic, Economic Welfare, Unemployment, Structural VAR

 

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