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A comparison of the Beveridge curve dynamics in Italy and USA

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  • Carlo Di Giorgio
  • Massimo Giannini

Abstract

In this article, we investigate the Beveridge curve dynamics in the USA and Italy by means of a cointegrated structural VAR model. A simple economic model is introduced to motivate the identifying assumptions of the empirical analysis. A stable long-run relationship is found for both countries. In order to study the dynamic behaviour of the model, and to decompose unemployment and vacancy fluctuations, we identify three common stochastic trends. The empirical results suggest that there are some sources of hysteresis in unemployment in both countries. Transitory shocks are also identified to account for the short-run dynamics of the model. The approach allows us to detach the long-run from the short-run dynamics, in order to provide information on the cyclical and structural Beveridge curve. Copyright Springer-Verlag 2012

Suggested Citation

  • Carlo Di Giorgio & Massimo Giannini, 2012. "A comparison of the Beveridge curve dynamics in Italy and USA," Empirical Economics, Springer, vol. 43(3), pages 945-983, December.
    • Handle: RePEc:spr:empeco:v:43:y:2012:i:3:p:945-983
    DOI: 10.1007/s00181-011-0511-y
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    Cited by:

    1. Josué Diwambuena & Raquel Fonseca & Stefan Schubert, 2021. "Italian Labour Frictions and Wage Rigidities in an Estimated DSGE," BEMPS - Bozen Economics & Management Paper Series BEMPS88, Faculty of Economics and Management at the Free University of Bozen.
    2. Josué Diwambuena & Francesco Ravazzolo, 2022. "What are the drivers of Labor Productivity?," BEMPS - Bozen Economics & Management Paper Series BEMPS86, Faculty of Economics and Management at the Free University of Bozen.
    3. Maria Laura Parisi & Enrico Marelli & Olga Demidova, 2015. "Labour Productivity of Young and Adult Temporary Workers and Youth Unemployment: a Cross-country Analysis," Discussion Papers 1_2015, CRISEI, University of Naples "Parthenope", Italy.

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    More about this item

    Keywords

    Beveridge curve; Common trends; SVECM; Hysteresis; C32; E24; J63;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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