Abstract.
Assuming full hysteresis in the Austrian labour market, a simple macroeconomic framework is used to model the effect of four structural shocks, i.e. shocks to productivity, demand, wages and labour supply. By using SVAR analysis, we derive impulse-response functions that show the effects of these shocks on unemployment. What constitutes a distinctive feature of our study is the deliberate use of overidentifying restrictions, allowing for a likelihood ratio test. The objection to SVAR methodology, that it relies on arbitrary assumptions, can thus be overcome, as invalid sets of identifying restrictions are rejected.
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First version received: September 2000/Final version received: March 2002
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ID="*" I thank Juan F. Jimeno, Martin Wagner, Helmut Hofer and Bernhard Böhm for their assistance; Robert Kunst and Martin Spitzer for their discussion of an earlier version of this paper; Thomas Sparla, Michael Roos and two anonymous referees for their helpful comments.
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Maidorn, S. The effects of shocks on the Austrian unemployment rate – a structural VAR approach. Empirical Economics 28, 387–402 (2003). https://doi.org/10.1007/s001810200137
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DOI: https://doi.org/10.1007/s001810200137