Structural Unemployment and the Output Gap in Germany: Evidence from an SVAR Analysis within a Hysteresis Framework

Ulrich Fritsche and Camille Logeay

No 312, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The German unemployment rate shows strong signs if non-stationarity over the course of the previous decades. This is in line with an insider-outsider model under full hysteresis. We applied a "theory-guided view" to the data using the structural VAR model as developed by Balmaseda, Dolado and López-Salido (2000) allowing for full hysteresis on the labour market. Our identification of the model implies long-lasting output gaps for Germany - especially for the disinflation period of the 1980s.

Keywords: Structural unemployment; output gap; structural VAR; insider-outsider model (search for similar items in EconPapers)
JEL-codes: C32 E12 E32 J64 (search for similar items in EconPapers)
Pages: 22 p.
Date: 2002
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Citations: View citations in EconPapers (7)

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