IDEAS home Printed from https://ideas.repec.org/a/bas/econst/y2014i3p58-91.html
   My bibliography  Save this article

A Research on the Relationship between the Real Aggregate Output and the Unemployment Rate in Bulgaria

Author

Listed:
  • Milen V. Velev

Abstract

This study examined the causal and quantitative relationships between the real aggregate output and the unemployment rate in Bulgaria. A review of the main theoretical concepts has been made, explaining relationships between inflation and unemployment, natural rate of unemployment and potential output, which are important indicators of macroeconomic equilibrium and stability. By comparison between the unemployment rate and inflation, it is estimated the natural rate of unemployment and the potential output in Bulgaria. The specific quantitative relationship between the real aggregate output and the unemployment rate in Bulgaria has been estimated and analyzed, by econometric models that are based on the Okun's law, expressed in gap and difference form. The paper discusses some of the factors that affect the value of the Okun's coefficient – the hysteresis effect, the growth of the labor force and the productivity of the labor force, the share of the shadow economy, the changes in the structure of unemployment by level of education and occupation, the seasonal factor, etc.

Suggested Citation

  • Milen V. Velev, 2014. "A Research on the Relationship between the Real Aggregate Output and the Unemployment Rate in Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 58-91.
    • Handle: RePEc:bas:econst:y:2014:i:3:p:58-91
    as

    Download full text from publisher

    File URL: http://www.ceeol.com/aspx/issuedetails.aspx?issueid=5124431f-c47c-4be4-bbf1-baf2e28f36b6&articleid=d24f2e1e-fef6-4364-b38e-d8228f7ac60f#ad24f2e1e-fef6-4364-b38e-d8228f7ac60f
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bart Cockx & Matteo Picchio, 2013. "Scarring effects of remaining unemployed for long-term unemployed school-leavers," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(4), pages 951-980, October.
    2. Feige,Edgar L. (ed.), 2007. "The Underground Economies," Cambridge Books, Cambridge University Press, number 9780521032841.
    3. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    4. McDonald, Ian M, 1987. "Customer Markets, Trade Unions and Stagflation," Economica, London School of Economics and Political Science, vol. 54(214), pages 139-153, May.
    5. Dixon, Huw David, 1988. "Unions, Oligopoly and the Natural Range of Employment," Economic Journal, Royal Economic Society, vol. 98(393), pages 1127-1147, December.
    6. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90, National Bureau of Economic Research, Inc.
    7. Friedrich Schneider & Friedrich Schneider, 2008. "Shadow Economies and Corruption all over the World: What do we Really Know?," Chapters, in: Michael Pickhardt & Edward Shinnick (ed.), The Shadow Economy, Corruption and Governance, chapter 7, pages 122-187, Edward Elgar Publishing.
    8. Mary C. Daly & John G. Fernald & Òscar Jordà & Fernanda Nechio, 2014. "Interpreting deviations from Okun’s Law," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    9. William Mitchell & Joan Muysken, 2008. "Full Employment Abandoned," Books, Edward Elgar Publishing, number 1188.
    10. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    11. Laurence M. Ball, 2009. "Hysteresis in Unemployment: Old and New Evidence," NBER Working Papers 14818, National Bureau of Economic Research, Inc.
    12. Feige, Edgar L. & Urban, Ivica, 2008. "Measuring underground (unobserved, non-observed, unrecorded) economies in transition countries: Can we trust GDP?," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 287-306, June.
    13. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76(4), pages 678-678.
    14. Franco Modigliani & Lucas Papademos, 1975. "Targets for Monetary Policy in the Coming Year," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 141-166.
    15. Bhaskar, V, 1990. "Wage Relativities and the Natural Range of Unemployment," Economic Journal, Royal Economic Society, vol. 100(400), pages 60-66, Supplemen.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Israel, Karl-Friedrich, 2017. "In the long run we are all unemployed?," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 67-81.
    2. Stefano FANTACONEY & Petya G. GARALOVA & Carlo MILANI, 2015. "Structural budget balance and fiscal policy: The limits of the European approach," Yildiz Social Science Review, Yildiz Technical University, vol. 1(2), pages 19-34.
    3. Lucas Papademos, 2005. "Macroeconomic theory and monetary policy: the contributions of Franco Modigliani and the ongoing debate," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 187-214.
    4. Richard K. Crump & Stefano Eusepi & Marc Giannoni & Aysegul Sahin, 2019. "A Unified Approach to Measuring u," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 50(1 (Spring), pages 143-238.
    5. Federico Bassi, 2020. "Chronic Excess Capacity and Unemployment Hysteresis in EU Countries. A Structural Approach," DISCE - Working Papers del Dipartimento di Economia e Finanza def091, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Niels Framroze Møller, 2019. "Decoding unemployment persistence: an econometric framework for identifying and comparing the sources of persistence with an application to UK macrodata," Empirical Economics, Springer, vol. 56(5), pages 1489-1514, May.
    7. Sohei Kaihatsu & Maiko Koga & Tomoya Sakata & Naoko Hara, 2019. "Interaction between Business Cycles and Economic Growth," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 37, pages 99-126, November.
    8. Gabriel P. Mathy, 2018. "Hysteresis and persistent long-term unemployment: the American Beveridge Curve of the Great Depression and World War II," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 12(1), pages 127-152, January.
    9. Niels Framroze Møller, 2013. "Understanding Unemployment Hysteresis: A system-based econometric approach to changing equilibria and slow adjustment," Discussion Papers 13-06, University of Copenhagen. Department of Economics.
    10. Bianchi, Marco & Zoega, Gylfi, 1997. "Challenges facing natural rate theory," European Economic Review, Elsevier, vol. 41(3-5), pages 535-547, April.
    11. Lucas Papademos, 2005. "Macroeconomic theory and monetary policy: the contributions of Franco Modigliani and the ongoing debate," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 187-214.
    12. Gómez García, F. & Rebollo Sanz, Y. & Usabiaga Ibáñez, C., 2002. "Nuevas estimaciones de la NAIRU de la economía española: métodos directos," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 20, pages 509-530, Diciembre.
    13. Vincent Sterk, 2015. "The Dark Corners of the Labor Market," 2015 Meeting Papers 798, Society for Economic Dynamics.
    14. repec:spo:wpecon:info:hdl:2441/6120 is not listed on IDEAS
    15. Eric Heyer & Frédéric Reynès & Henri Sterdyniak, 2004. "Observable and unobservable variables in the theory of the equilibrium rate of unemployment, a comparison between France and the United States," Working Papers hal-01027420, HAL.
    16. Mikael Carlsson & Stefan Eriksson & Nils Gottfries, 2006. "Testing Theories of Job Creation: Does Supply Create Its Own Demand?," CESifo Working Paper Series 1866, CESifo.
    17. Abdoulaye Millogo, 2020. "Hysteresis Effects and Macroeconomics Gains from Unconventional Monetary Policies Stabilization," Cahiers de recherche 20-12, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    18. Kurmaş Akdoğan, 2017. "Unemployment hysteresis and structural change in Europe," Empirical Economics, Springer, vol. 53(4), pages 1415-1440, December.
    19. Sterk, Vincent, 2016. "The dark corners of the labor market," LSE Research Online Documents on Economics 86244, London School of Economics and Political Science, LSE Library.
    20. Boyer, Robert, 1992. "La crise de la macroéconomie, une conséquence de la méconnaissance des institutions?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(1), pages 43-68, mars et j.
    21. Britta Gehrke & Brigitte Hochmuth, 2021. "Counteracting Unemployment in Crises: Non‐Linear Effects of Short‐Time Work Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 144-183, January.

    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2014:i:3:p:58-91. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Diana Dimitrova (email available below). General contact details of provider: https://edirc.repec.org/data/ikbasbg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.