Abstract:Major economic events, such as the global financial crisis, are episodes of identifiable duration that differ from other time periods. Using monthly data on the unemployment rate, labour force participation rate and employment for Australia for the period from 1978 to 2012, we estimate a Markov-switching SVAR model to examine the relationship between unemployment and labour force participation and the performance of the Australian labour market. Three distinct labour market regimes are identified. We find that… Show more
“…Gaston and G. Rajaguru (2015) investigated the unemployment rate, the labour force participation rate (LFPR) and the employment rate in Australia during the period from 1978 to 2012. They estimated the Markov-switching structural vector autoregression (SVAR) in order to examine the relationship between unemployment, labour force participation and productivity in the Australian labour market [11]. The research revealed the existence of different regimes in the functioning of the labour market, including the regime with low unemployment and the low Labour Force Participation Rate (LFPR), the long period of relative stability and the short period of high unemployment and a low coefficient of labour force participation.…”
The paper studies asymmetries in cyclical behaviour of the Ukrainian and Polish labour markets, accompanied by significant nonlinear fluctuations in economic activity and the unemployment rate due to economic instability, dramatic internal disturbances of social environment and strong external shocks. We investigate the labour market in Ukraine in comparison with the labour market in Poland, the country closest to Ukraine. The conducted econometric analysis shows that after a significant economic downturn, the recovery of the labour market recovers at a slower pace than the overall economic activity. The developed Markov switching autoregressive model implies distinctive regimes of the behaviour of the unemployment rate over time, which is associated with declining and rising modes. The changes in jobless recovery depend on the current and previous changes in real gross domestic product, which has a significant impact on the unemployment rate in both regimes. The estimated transition probabilities related to being in either of the regimes implies that the Ukrainian labour market exhibits the greatest probability of remaining in the increasing unemployment regime, as well as a relatively high probability of transition from low to high unemployment. On the contrary, the Polish unemployment rate is characterised by a high probability of being in a regime with low and declining unemployment, as well as a low probability of moving into an unfavourable situation, which reflects stability of its labour market. The opposite features attributed to the Ukrainian labour market, on the one hand, and the Polish labour market, on the other hand, cause significant labour migration from Ukraine to Poland. The high uncertainty in Ukraine is a motive to seek jobs overseas, especially for the young generation. The results of the investigation confirm the urgency and importance of immediate positive shifts and development of the Ukrainian labour market in order to preserve human capital and, taking into account the negative demographic trends, ageing of the population and significant labour migration, to prevent potential depletion of the labour force.
“…Gaston and G. Rajaguru (2015) investigated the unemployment rate, the labour force participation rate (LFPR) and the employment rate in Australia during the period from 1978 to 2012. They estimated the Markov-switching structural vector autoregression (SVAR) in order to examine the relationship between unemployment, labour force participation and productivity in the Australian labour market [11]. The research revealed the existence of different regimes in the functioning of the labour market, including the regime with low unemployment and the low Labour Force Participation Rate (LFPR), the long period of relative stability and the short period of high unemployment and a low coefficient of labour force participation.…”
The paper studies asymmetries in cyclical behaviour of the Ukrainian and Polish labour markets, accompanied by significant nonlinear fluctuations in economic activity and the unemployment rate due to economic instability, dramatic internal disturbances of social environment and strong external shocks. We investigate the labour market in Ukraine in comparison with the labour market in Poland, the country closest to Ukraine. The conducted econometric analysis shows that after a significant economic downturn, the recovery of the labour market recovers at a slower pace than the overall economic activity. The developed Markov switching autoregressive model implies distinctive regimes of the behaviour of the unemployment rate over time, which is associated with declining and rising modes. The changes in jobless recovery depend on the current and previous changes in real gross domestic product, which has a significant impact on the unemployment rate in both regimes. The estimated transition probabilities related to being in either of the regimes implies that the Ukrainian labour market exhibits the greatest probability of remaining in the increasing unemployment regime, as well as a relatively high probability of transition from low to high unemployment. On the contrary, the Polish unemployment rate is characterised by a high probability of being in a regime with low and declining unemployment, as well as a low probability of moving into an unfavourable situation, which reflects stability of its labour market. The opposite features attributed to the Ukrainian labour market, on the one hand, and the Polish labour market, on the other hand, cause significant labour migration from Ukraine to Poland. The high uncertainty in Ukraine is a motive to seek jobs overseas, especially for the young generation. The results of the investigation confirm the urgency and importance of immediate positive shifts and development of the Ukrainian labour market in order to preserve human capital and, taking into account the negative demographic trends, ageing of the population and significant labour migration, to prevent potential depletion of the labour force.
This research empirically investigated the effectiveness of the interest rate policy of the Federal Reserve (Fed) on managing the subprime mortgage crisis. The study employed the autoregressive distributed lag model (ARDL) to analyze the stability of the Fed’s monetary policy, thereby providing an alternative analysis tool. Correlation analysis results showed a strong positive and statistically significant relationship between Fed funds rate and the labor market, a strong negative and statistically significant relationship between Fed funds rate and the housing market, and a strong negative and statistically significant relationship between Fed funds rate and price stability. In contrast, results of the ARDL model bounds test for cointegration indicated that house price index (HPI), labor market, and price stability were cointegrated, hence exhibiting a long-run relationship with Fed funds rate. This research demonstrates that additional empirical studies using new techniques are required to reevaluate the Fisher effect and expand the understanding of the mechanism between interest rates and inflation. This issue is extremely important, particularly for countries such as the U.S., the UK adapting inflation targeting policy using interest rates as an operational target.
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