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ESTIMATED SMALL OPEN ECONOMY MODEL WITH FRICTIONAL UNEMPLOYMENT
Author(s) -
ALBERTINI JULIEN,
KAMBER GÜNEŞ,
KIRKER MICHAEL
Publication year - 2012
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2012.00585.x
Subject(s) - economics , unemployment , business cycle , matching (statistics) , small open economy , monetary transmission mechanism , open economy , macroeconomics , labour economics , econometrics , monetary policy , inflation targeting , credit channel , statistics , mathematics , exchange rate
This paper investigates labour market dynamics in New Zealand by estimating a structural small open economy model enriched with standard search and matching frictions in the labour market. We show that the model fits the business cycle features of key macroeconomic variables reasonably well and provides an appealing monetary transmission mechanism. We then extend our analysis to examine the driving forces behind labour market variables. Our findings suggest that the bulk of variation in labour market variables is solely explained by disturbances pertaining to the labour market.