The effects of shocks on the Austrian unemployment rate – a structural VAR approach

Susanne Maidorn

Empirical Economics, 2003, vol. 28, issue 2, 387-402

Abstract: Assuming full hysteresis in the Austrian labour market, a simple macroeconomic framework is used to model the effect of four structural shocks, i.e. shocks to productivity, demand, wages and labour supply. By using SVAR analysis, we derive impulse-response functions that show the effects of these shocks on unemployment. What constitutes a distinctive feature of our study is the deliberate use of overidentifying restrictions, allowing for a likelihood ratio test. The objection to SVAR methodology, that it relies on arbitrary assumptions, can thus be overcome, as invalid sets of identifying restrictions are rejected. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Key words: Unemployment; Hysteresis; Structural VAR, JEL classification: J40; E24, (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s001810200137

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