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The Kalman Filter Approach for Estimating the Natural Unemployment Rate in Romania

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  • Mihaela Simionescu

    (Romanian Academy- Institute for Economic Forecasting)

Abstract

The aim of this research is to determine the monthly natural rate of unemployment during the third quarter of 2013 in Romania. The Phillips curve approach is not valid for the Romanian economy, but Kalman filter is a suitable approach for computing the natural rate of unemployment. We make the assumption that the cyclical component follows a random walk. Predictions were made for the unemployment rate in Romania using Kalman approach during July-September 2013 and on this horizon an insignificant decrease was observed from a month to another. A value of 5.85% is expected for unemployment rate in Romania in September 2013.

Suggested Citation

  • Mihaela Simionescu, 2014. "The Kalman Filter Approach for Estimating the Natural Unemployment Rate in Romania," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 10(1), pages 148-159, February.
    • Handle: RePEc:dug:actaec:y:2014:i:1:p:148-159
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    References listed on IDEAS

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