ORCID
Beatrice Pierluigi 0000-0003-0905-6409
Abstract
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.
Recommended Citation
Pierluigi, Beatrice and Bruha, Jan
(2024)
"Euro area labour markets: Different reaction to shocks?,"
Journal of Banking and Financial Economics: Vol. 2014:
No.
2, Article 2.
DOI: 10.7172/2353-6845.jbfe.2014.2.2
Available at:
https://press.wz.uw.edu.pl/jbfe/vol2014/iss2/2
First Page
34
Last Page
60
Page Count
27
Received Date
13 May 2014
Revised Date
15 July 2014
Accept Date
27 October 2014
Online Available Date
19 November 2014
DOI
10.7172/2353-6845.jbfe.2014.2.2
JEL Code
C51; C53; E17; J21
Publisher
University of Warsaw