The impact of financial stress and economic uncertainty on unemployment

This study analyzes the impact of financial stress and economic uncertainty on unemployment in Turkey for the period 2007-2022 with monthly data. Financial stress and economic uncertainty variables are examined through an indicator and two distinct indices. The model is estimated using a structural vector autoregression (SVAR) model. This thesis shows that as the level of financial stress and economic uncertainty increases, the unemployment rate also increases. The evidence in this thesis also demonstrates that the part of economic uncertainty that is not related to financial stress has an increasing effect on unemployment rate, while the part of financial uncertainty that is not related to financial stress has almost no effect on unemployment rate.