The European refugee crisis and the natural rate of output
Katja Heinisch () and
Klaus Wohlrabe ()
No 30/2016, IWH Discussion Papers from Halle Institute for Economic Research (IWH)
The European Commission follows a harmonized approach for calculating structural (potential) output for EU member states that takes into account labor as an important ingredient. This paper shows how the recent huge migrants inflow to Europe affects trend output. Due to the fact that the immigrants immediately increase the working population but effectively do not enter the labor market, we illustrate that the potential output is potentially upward biased without any corrections. Taking Germany as an example, we find that the average medium-term potential growth rate is lower if the migration flow is modeled adequately compared to results based on the unadjusted European Commission procedure.
Keywords: migration; refugee crisis; natural rate of output; filtering; EU-commission (search for similar items in EconPapers)
JEL-codes: F22 J11 J61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-mig
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Journal Article: The European refugee crisis and the natural rate of output (2017)
Working Paper: The European refugee crisis and the natural rate of output (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:302016
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