Unemployment or credit: Which one holds the potential? Results for a small open economy with a low degree of financialization

Constantinescu, Mihnea; Nguyen, Anh D. M.

doi:10.1016/j.ecosys.2018.08.003

Cited by 6 publications

(4 citation statements)

References 26 publications

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“…The shocks should be uncorrelated, although [15] allows correlation. Some authors do not include supply shocks or inflation expectations in the equation at all [11,12,19]. On the other hand, other authors add dummy variables to identify the season (quarter) [22] or a structural break.…”

Section: Description and Discussion Of Approaches And Models Used In mentioning

confidence: 99%

Review of Kalman Filter Employment in the NAIRU Estimation

Fronckova

Pražák

Soukal

2019

Systems

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The aim of the paper is to provide a recent overview of Kalman filter employment in the non-accelerating inflation rate of unemployment (NAIRU) estimation. The NAIRU plays a key part in an economic system. A certain unemployment rate which is consistent with a stable rate of inflation is one of the conditions for economic system stability. Since the NAIRU cannot be directly observed and measured, it is one of the most fitting problems for the Kalman filter application. The search for original, NAIRU focused and Kalman filter employment studies was performed in three scientific databases: Web of Science, Scopus, and ScienceDirect. A sample of 152 papers was narrowed down to 25 studies, which were described in greater detail regarding the focus, methods, model features, limitations, and other characteristics. A group of studies using a purely statistical approach of decomposing unemployment into a trend and cyclical component was identified. The next group uses the reduced-form approach which is sometimes combined with statistical decomposition. In such cases, the models are usually based on the backward-looking Phillips curve. Nevertheless, the forward-looking, New Keynesian or rarely hybrid New Keynesian variant can also be encountered.

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Section: Description and Discussion Of Approaches And Models Used In mentioning

confidence: 99%

Review of Kalman Filter Employment in the NAIRU Estimation

Fronckova

Pražák

Soukal

2019

Systems

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“…When considering potential aggregate effects of lower economic dynamism (understood as lower levels of churning), in particular focusing on its productivity enhancing effects, a corroborating piece of evidence is provided in Constantinescu and Nguyen (2018). Using a multivariate unobserved component model to estimate the level of potential output and the associated output gap, the authors find a lower level of average growth in potential output for the Lithuanian economy following the 2008 crisis.…”

Section: Employment Flowsmentioning

confidence: 99%

Firm productivity, heterogeneity and macroeconomic dynamics: a data-driven investigation

Constantinescu¹,

Proškutė

2019

Baltic Journal of Economics

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In this paper, we offer a unique firm-level view of the empirical regularities underlying the evolution of the Lithuanian economy over the period of 2000-2014. Employing a novel dataset, we investigate key distributional moments of real and financial variables of Lithuanian firms. We focus in particular on the issues related to productivity, firm birth and death and the associated employment creation and destruction across firm sizes, industry classification and trade status (exporting vs. non-exporting). We refrain from any structural modelling attempt in order to map out the key economic processes across industries and selected firm characteristics. Nevertheless, existing theoretical and empirical findings guide our analysis and the selection of the main variables to investigate. We uncover similar regularities as already highlighted in the literature: trade participation and firm productivity are strongly positively linked, the 2008 recession has had a cleansing effect on the non-tradable sector, firm birth (death) is highly pro (counter)-cyclical. The richness of the dataset allows us to produce additional insights: for example, we observe an increasing share of exporting but a constant share of importing firms since 2000.

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“…The academic studies delivered very similar results. Constantinescu and Nguyen used the data from 2000 to 2015 and found that the average of the natural rate of unemployment was 11.2 (Constantinescu et al, 2018). Camarero, Carrion-i-Silvestre and Tamarit in their study, that deals with the estimation of NAIRUs for eight Central and Eastern European countries and Malta (Camarero et al, 2005), i.e., the countries, that accessed European Union in the year 2004, used the OLS regression approach and relied on the univariate procedure, developed by Staiger, Stock and Watson (Staiger et al, 1997).…”

Section: An Overview Of Previous Studies About the Phillips Curve Rel...mentioning

confidence: 99%

The Estimation of Traditional Phillips Curve

Bartkus

2023

ECO

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This article presents theoretical foundations for original Phillips curve formulation and an empirical investigation, where the structure of the theoretical model serves as a template for the creation of the empirical model.For a couple of decades the majority of empirical Phillips curve type assessments are performed using the New Keynesian Phillips curve with Calvo pricing as a benchmark for this type of relationship. New Keynesian model has solid microeconomic foundations, has proved itself very well in the analysis of price stickiness; nevertheless, it is not without limitations. The main insufficiency of New Keynesian model is that it has no direct links to the conditions and the changes that occur in the labour market. The need to encompass the conditions in labour market comes from the coincides that occur time to time when the growth rates of aggregate production may diminish or even become negative, but the level of employment may stay the same, what in turn means that the pressure on inflation won’t drop, despite the fact that production level has not increased as expected or even has decreased. This article aims to fill this gap and presents alternative theoretical foundations for Phillips curve, that lead to the model with direct links to the labour market. Theoretical foundations are necessary as they may help to minimize the risks to miss some important details or to omit important factors. Although the empirical analysis in this paper is based on Lithuanian data, it is not country specific.

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Unemployment or credit: Which one holds the potential? Results for a small open economy with a low degree of financialization

Cited by 6 publications

References 26 publications

Review of Kalman Filter Employment in the NAIRU Estimation

Review of Kalman Filter Employment in the NAIRU Estimation

Firm productivity, heterogeneity and macroeconomic dynamics: a data-driven investigation

The Estimation of Traditional Phillips Curve

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