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The Dynamic Effects of Shocks to Labour Markets: Evidence from OECD Countries

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  • Balmaseda, Manuel
  • Dolado, Juan J
  • Lopez-Salido, J David

Abstract

This paper uses a set of plausible long-run identifying restrictions on a three-variable system, including output growth, real wage growth, and the unemployment rate, to isolate three independent structural shocks which drive fluctuations in those variables in a sample of 16 OECD countries during 1950-96. These shocks are interpreted as aggregate demand, productivity, and labour supply disturbances. As a by-product of the previous analysis, the cyclical behaviour of real wages in response to a demand shock is re-examined and two indices of real wage rigidity are derived. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Balmaseda, Manuel & Dolado, Juan J & Lopez-Salido, J David, 2000. "The Dynamic Effects of Shocks to Labour Markets: Evidence from OECD Countries," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 3-23, January.
  • Handle: RePEc:oup:oxecpp:v:52:y:2000:i:1:p:3-23
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