Publication details

Labour market frictions in global economic crisis: RBC model of Czech economy


TVRZ Stanislav VAŠÍČEK Osvald

Year of publication 2011
Type Article in Proceedings
Conference Mathematical Methods in Economics 2011
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords RBC; Bayesian methods; recursive estimation; labour market frictions; economic crisis
Description This paper deals with analysis of labour market frictions of Czech economy based on RBC model framework. Labour market frictions are modelled as aggregate costs that firms and workers face in the process of forming a match. The question of interest is how do the labour market frictions behave during business cycle and what are the implications for development of unemployment rate. The role of labour market frictions during recent global financial and subsequent economic crisis is investigated. Possible structural changes of economy caused by global crisis are considered as well. Explaining potential of labour market frictions concept is evaluated by comparison of marginal likelihood of different specifications of the model. To capture the changing structure of economy a recursive estimation method is employed. Sensitivity and identification analysis of estimated parameters is performed as well. Results confirm the importance of labour market frictions and suggest their procyclical nature.
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