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On unemployment cycles in the Euro Area, 1999–2018

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  • Charalampidis, Nikolaos

Abstract

This paper studies the recurrent sources of unit-root unemployment fluctuations in Greece, Italy, Portugal, Spain, and the Euro Area by integrating wage markup and labor disutility shocks that exhibit permanent euro-area-wide shifts, country-specific trend developments, and stationary changes in an estimated DSGE model. In all economies, these labor market shocks account for a negligible share of unemployment cycles. Demand shocks explain about 40% of them, contribute to the pre-crisis convergence of unemployment rates, and shape the unemployment spikes during the Great Recession. Cross-country relative price distortions and supply factors account for about 40% and 20% of those cycles, respectively.

Suggested Citation

  • Charalampidis, Nikolaos, 2020. "On unemployment cycles in the Euro Area, 1999–2018," European Economic Review, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:eecrev:v:121:y:2020:i:c:s0014292119301898
    DOI: 10.1016/j.euroecorev.2019.103329
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    More about this item

    Keywords

    Unemployment rate; Wage markup; Euro Area; Bayesian estimation;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions

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