Publication details

Impact of Labour and Growth Shocks in Small Open Economy: DSGE Approach

Authors

BECHNÝ Jakub

Year of publication 2020
Type Article in Proceedings
Conference 38th International Conferenceon Mathematical Methods in Economics (MME 2020) Conference Proceedings
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web https://mme2020.mendelu.cz/wcd/w-rek-mme/mme2020_conference_proceedings_final.pdf
Keywords Bayesian estimation; DSGE model; labour market; small open economy
Description This paper aims to identify the impacts of the labour market shocksfor economic growth, and the impact of the growth shocks for the labour marketvariables. We use a small open economy dynamic stochastic general equilibrium model with real wage rigidity and involuntary unemployment. The model is estimated by using a Bayesian approach and 16 observed variables from 2001Q1 to2019Q4 for the Czech economy. The main results are as follows: (i) The labour supply shocks contributed to the economic growth and induced disinflationary pressure during 2010–2017 period, but are the barrier of growth from 2018 on-wards; (ii) Productivity and domestic cost shocks are the dominant determinants of real wage growth; (iii) The effect of the domestic demand shock on the unemployment is twice as large as the foreign demand shock.
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