COVID-19 impact on unemployment and inflation: The VAR model

From past to present, unemployment and inflation, which are important for the economy of every country, have always been on the agenda. These two macroeconomic indicators, which are directly affected by the social, cultural and economic events experienced today, are often the subject of academic studies. The effects of the COVID-19 pandemic, which sets an example for these events and is under the influence of the whole world, on unemployment and inflation are also worth examining. For this reason, in this study (as of the date of the first case seen in Turkey), the relationship between inflation, unemployment and the number of daily new cases of COVID-19 between 2020:03 - 2022:03 was analyzed by Vector Autoregression Model (VAR). During the analysis, the data sets were analysed with the Granger causality, impulse-response and variance decomposition tests of the VAR model. In line with the empirical findings obtained in the study, a bidirectional relationship was found between inflation and the number of new cases per day, and a unidirectional relationship between unemployment and the number of new cases per day.