COVID-19 Effects on the U.S. Unemployment: Nationwide and State-Level Evidence from Google Trends

74 Pages Posted: 24 Mar 2020 Last revised: 26 Jun 2020

See all articles by Hakan Yilmazkuday

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: June 26, 2020

Abstract

This paper investigates the relationship between nationwide Google search queries of "covid-19" and "unemployment" using daily data from the United States. The investigation is achieved by employing a structural vector autoregression model, where nationwide queries of "interest rate" and "inflation" are also included. Historical decomposition analysis suggests that the spike in the nationwide search interest of "unemployment" is mostly explained by that of "covid-19" in mid-March 2020. One unit of a positive nationwide "covid-19" shock results in about 8.1 units of a significant cumulative increase in nationwide "unemployment" after two months, ranging between about 2.5 and about 9.3 across U.S. states when the additional state-level search query of "unemployment" is included, suggesting unequal "unemployment" effects of "covid-19" across states. Regarding monetary policy, one unit of a negative nationwide "interest rate" shock results in 0.4 units of a significant cumulative reduction in nationwide "unemployment" after two months, although the corresponding effects range as between 1.3 units of an increase and 0.5 units of a reduction in "unemployment" across U.S. states, suggesting evidence for redistributive effects of nationwide monetary policy.

Keywords: COVID-19, Coronavirus, Unemployment, Interest Rate, Inflation

JEL Classification: J63, F66, I10

Suggested Citation

Yilmazkuday, Hakan, COVID-19 Effects on the U.S. Unemployment: Nationwide and State-Level Evidence from Google Trends (June 26, 2020). Available at SSRN: https://ssrn.com/abstract=3559860 or http://dx.doi.org/10.2139/ssrn.3559860

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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