Labour market frictions and vacancies: small open economy DSGE model
| Authors | |
|---|---|
| Year of publication | 2019 |
| Type | Article in Proceedings |
| Conference | 37th International Conference Mathematical Methods in Economics Conference Proceedings |
| MU Faculty or unit | |
| Citation | |
| Web | http://mme2019.ef.jcu.cz/files/conference_proceedings.pdf |
| Keywords | Bayesian estimation; DSGE model; in-sample forecasts; job vacancies; labour market; predictive ability; small open economy |
| Description | The goal of this paper is to incorporate job vacancies into a small open economy dynamic stochastic general equilibrium model with involuntary unemployment. The observed vacancies are introduced into the model by using a variant of matching function. The model is estimated by using a Bayesian approach and 16 observed variables from 2001Q1 to 2018Q4 for the Czech economy. The observed vacancies allow us to identify hiring cost shock which has a moderate impact on inflation. However, the observed vacancies do not improve the overall predictive ability of the model, since the model over-predicts the vacancies’ volatility. |
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