Publication details
Labour market rigidities: A DSGE approach
| Authors | |
|---|---|
| Year of publication | 2014 |
| Type | Article in Proceedings |
| Conference | 32nd International Conference Mathematical Methods in Economics Conference Proceedings |
| MU Faculty or unit | |
| Citation | |
| Web | Conference proceedings |
| Field | Economy |
| Keywords | DSGE model; labour market; frictions; search and matching; small open economy |
| Attached files | |
| Description | DSGE models are frequently applied tools in modern macroeconomic modelling. They are used to describe the behavior of the economy. The goal of this paper is to capture the dynamics of the labour market in a small open economy. For our estimation we chose a specic DSGE model and applied it to the Hungarian economy. This model contains search and matching mechanisms, while the wages and the worked hours are the result of the Nash bargaining problem. The wage and price rigidities are modelled according to the approach developed by Rotemberg. This method somewhat diers from the widely used Calvo price setting. The model is able to capture the great degree of openness of the Hungarian economy and the relatively high levels of frictions. Furthermore the model conrms the weakness of the trade unions. Surprisingly, the results show quite low in uence of the labour market on the dynamics of the rest of the economy. |
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