On unemployment cycles in the Euro Area, 1999–2018
European Economic Review, 2020, vol. 121, issue C
This paper studies the recurrent sources of unit-root unemployment fluctuations in Greece, Italy, Portugal, Spain, and the Euro Area by integrating wage markup and labor disutility shocks that exhibit permanent euro-area-wide shifts, country-specific trend developments, and stationary changes in an estimated DSGE model. In all economies, these labor market shocks account for a negligible share of unemployment cycles. Demand shocks explain about 40% of them, contribute to the pre-crisis convergence of unemployment rates, and shape the unemployment spikes during the Great Recession. Cross-country relative price distortions and supply factors account for about 40% and 20% of those cycles, respectively.
Keywords: Unemployment rate; Wage markup; Euro Area; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E32 E24 E52 F45 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:121:y:2020:i:c:s0014292119301898
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