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Economic Shocks and their Effects on Unemployment in the Euro Area Periphery under the EMU

Pietro Dallari () and Antonio Ribba ()

Center for Economic Research (RECent) from University of Modena and Reggio E., Dept. of Economics "Marco Biagi"

Abstract: In this paper we aim to investigate the effects of several types of shocks on unemployment in peripheral European countries under the EMU. We use a structural near- VAR model to account for the supranational conduct of monetary policy on the one hand, and domestic fiscal policy and financial shocks on the other hand. Our main findings are: (i) the unemployment multipliers of government spending shocks are higher than the ones associated with government revenues shocks, and they vary across countries; (ii) instability in the unemployment responses over time is marked, with evidence that a regime shift took place in some countries since 2007; (iii) fiscal and financial shocks are not among the long-term drivers of unemployment, but instead a more important role is played by Euro area-wide shocks, with a pre-eminent role for the common monetary policy shock.

Keywords: business cycles; unemployment; euro area; near-Structural VARs (search for similar items in EconPapers)
JEL-codes: E32 E62 C32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg and nep-mac
Date: 2015-07
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Working Paper: Economic Shocks and their Effects on Unemployment in the Euro Area Periphery under the EMU (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mod:recent:114

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