A Model of the Slovak Economy with Labour Market Frictions: Neoclassical RBC model
|Original title:||A Model of the Slovak Economy with Labour Market Frictions: Neoclassical RBC model|
|Authors:||Stanislav Tvrz, Osvald Vašíček|
|Keywords:||RBC model; labour market frictions; Bayesian methods|
Concept of this model of real Slovak economy is based on neoclassical theory of real business cycles (RBC). Costs arising during the job search of unemployed workers and their subsequent hiring are incorporated in the model structure of the labour market. These costs represent total costs of job search and hiring bore by potential employers as well as potential employees. Real labour market frictions modeled in this way bring new dynamics into the model and make it possible to understand the inner structure of labour market better. The model also contains standard habit in consumption together with capital adjustment costs. Estimated RBC model is used to analyze the development of unit hiring costs and their effects on unemployment.