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A comparison of the Beveridge curve dynamics in Italy and USA

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  • Carlo Di Giorgio

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  • Massimo Giannini

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    Abstract

    In this article, we investigate the Beveridge curve dynamics in the USA and Italy by means of a cointegrated structural VAR model. A simple economic model is introduced to motivate the identifying assumptions of the empirical analysis. A stable long-run relationship is found for both countries. In order to study the dynamic behaviour of the model, and to decompose unemployment and vacancy fluctuations, we identify three common stochastic trends. The empirical results suggest that there are some sources of hysteresis in unemployment in both countries. Transitory shocks are also identified to account for the short-run dynamics of the model. The approach allows us to detach the long-run from the short-run dynamics, in order to provide information on the cyclical and structural Beveridge curve. Copyright Springer-Verlag 2012

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    Bibliographic Info

    Article provided by Springer in its journal Empirical Economics.

    Volume (Year): 43 (2012)
    Issue (Month): 3 (December)
    Pages: 945-983

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    Handle: RePEc:spr:empeco:v:43:y:2012:i:3:p:945-983

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    Related research

    Keywords: Beveridge curve; Common trends; SVECM; Hysteresis; C32; E24; J63;

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    1. Ramey, Garey & Fujita, Shigeru, 2006. "Job Matching and Propagation," University of California at San Diego, Economics Working Paper Series qt53s671h7, Department of Economics, UC San Diego.
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