PL EN


2014 | 2(2) | 34-60
Article title

Euro area labour markets: Different reaction to shocks?

Content
Title variants
Languages of publication
EN
Abstracts
EN
A small labour market model for the six largest euro-area countries (Germany, France, Italy, Spain, the Netherlands and Belgium) is estimated in a state space framework. The model entails, in the long run, four driving forces: trend labour force, trend labour productivity, long-run inflation rate and trend hours worked. The short run dynamics is governed by a VAR model including six shocks. The state-space framework is convenient for the decomposition of endogenous variables in trends and cycles, for shock decomposition, for incorporating external judgment, and for running conditional projections. The forecast performance of the model is rather satisfactory. The model is used to carry out a policy experiment with the objective of investigating whether euro-area labour markets react differently to a reduction in labour costs. Results suggest that, following the 2008-2009 recession, moderate wage growth would significantly help delivering a more job-intense recovery.
Keywords
Year
Issue
Pages
34-60
Physical description
Dates
online
2014-11-19
Contributors
  • European Central Bank, Germany
author
  • Czech National Bank, Czech Republic
References
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Document Type
Publication order reference
Identifiers
ISSN
2353-6845
YADDA identifier
bwmeta1.element.desklight-4b4b469f-2ead-4788-9b3d-0c5620c62a8c
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