Econometric modelling of unemployment in Serbia during period 2008-2013

Abstract

The purpose of the paper is to econometrically exploit the characteristics of unemployment in Serbia upon the start of the 2008 economic crisis. The methodological framework is based on the cointegrated vector autoregressive model that consists of the following macroeconomic variables: unemployment rate, prices, nominal wages and nominal exchange rate. These variables are unit-root processes and their relationship is examined within the multivariate cointegrated time series set-up. Following the deductive modelling approach, we reached the specification that explains unemployment rate by real wages. The results show the negative consequences of the economic crisis to the labour market, with an extremely high increase in the unemployment rate. Strong negative impact of real wages on unemployment rate is additionally confirmed by its dynamic effects throughout the impulse response function.

Unemployment rate dynamics in small open economy: The case of Serbia

“…The strong long-run association of real wages and unemployment rate in Serbia was also detected for earlier period 2008-2013 (Anić & Mladenović, 2014). The unemployment rate is only equilibrium-adjusting in both 2008-2013 and 2014-2019 period.…”

“…Certain researches are shortly overviewed. Anić and Mladenović (2014) found cointegration between unemployment rate and real wages in Serbia for the 2008-2013 period. In the long run, increase in real wages by 1% invoked the reduction of unemployment rate by 0.47%.…”