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Labor Market Frictions in the Estimated DSGE Model for Armenia

Author

Listed:
  • Haykaz Igityan

    (Monetary Policy Department, Central Bank of Armenia)

Abstract

This paper develops DSGE model for Armenia allowing the household to supply labor both to formal and informal sectors. The paper discusses costs per hire, which is equivalent to matching function approach adopted by search models. The model is estimated by Bayesian method using 9 Armenian time series and 9 structural shocks. The estimated model reproduces dynamics of data quite well. Estimated structural shocks are supported by stylized facts and historical events. The fully micro-founded model with labor market frictions allows getting a deeper insight into the Armenian labor market developments.

Suggested Citation

  • Haykaz Igityan, 2016. "Labor Market Frictions in the Estimated DSGE Model for Armenia," Working Papers 5, Central Bank of the Republic of Armenia.
    • Handle: RePEc:ara:wpaper:005
    as

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    File URL: https://www.cba.am/EN/panalyticalmaterialsresearches/Analytical_31.01.2017.pdf
    File Function: First version, 2016
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    More about this item

    Keywords

    New Keynesian; unemployment; informal labor market; labor market tightness; hiring costs; Bayesian estimation;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

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