A Stock-Flow Accounting Model of the Labor Market: An Application to Israel

The paper utilizes a theoretical stock-flow accounting model of the labor market, similar toBlanchard and Diamond (1989). Identifying restrictions are derived from the theoretical modeland are imposed on a SVAR system. The estimation allows for decomposing fluctuations to theircyclical and structural components. The model is applied to the Israeli economy. The estimatessuggest that non-cyclical factors account for at least half of the decline of the unemployment rateduring the period between 2004-Q1, when unemployment peaked at 10.9 percent, and 2011-Q4,when it marked a trough at 5.4 percent; suggesting a shift inward of the Beveridge curve.
Publication date: March 2015
ISBN: 9781484360569
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Topics covered in this book

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Economics- Macroeconomics , Economics / General , International - Economics , Structural unemployment , Beveridge curve , SVAR with sign restrictions

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