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PATTERNS OF UNEMPLOYMENT DYNAMICS IN GERMANY

  • Daniela Rahn (a1) and Enzo Weber (a2)
Abstract

Using a structural vector autoregressive (SVAR) model, this paper provides deeper insight into unemployment dynamics in Germany. We identify a technology shock and two policy shocks that play a central role in business cycle research. Accordingly, we enrich the discussion on the sources of unemployment dynamics by considering demand-side impulses. The worker reallocation process varies substantially with the identified shocks. The job-finding rate plays a larger role after a technology shock and a monetary policy shock, whereas the separation rate appears to be the dominant margin after a fiscal policy shock. Technology shocks turn out to be relatively important for variations in the transition rates. Regarding policy shocks, our results point toward fiscal interventions as a promising instrument but with several limitations.

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Corresponding author
Address correspondence to: Daniela Rahn, Deutsche Bundesbank, Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany; e-mail: daniela.rahn@bundesbank.de.
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The views expressed in this article represent the author's personal opinions and do not necessarily reflect the views of the Deutsche Bundesbank or its staff.

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Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
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