Unemployment in a small open economy : Finland and New Zealand

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dc.contributor Suomen Pankki
dc.contributor.author Mayes, David G.
dc.contributor.author Vilmunen, Jouko
dc.date.accessioned 2014-09-22T07:59:09Z
dc.date.available 2014-09-22T07:59:09Z
dc.date.issued 1999
dc.identifier.isbn 951-686-619-0
dc.identifier.issn 0785-3572
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/7903
dc.description.abstract Unemployment is now the key issue for economic policy in the OECD and Europe in particular.By examining data from the period 1962- 1996 for two highly different small open OECD economies, Finland and New Zealand, in a VE? model this paper seeks to cast light on three questions: the degree to which unemployment has been the result of slow adjustment to large external shocks; the degree to which differences in labour market structures can lead to different responses to shocks; the importance of the exchange rate and the external sector in resolving the problmems.The approach uses a fairly general model of the labour market that includes wages, unemployment, the capital stock and the terms of trade.It uses cointegration analysis to establish long-run relationships among the four variables.In the case of Finland we find that the shoji-run response of unemployment to shocks (to the long-run relationship) is large relative to the response of real wage and the terms of trade.In New Zealand on the other hand both real wages and the terms of trade, in particular, adjust more rapidly. As a result the burden of short-run adjustment in the New Zealand economy appears to fall more heavily on (relative) prices.Since the unemployment rate in both countries displays hysteresis, these results suggest that relative price adjustment in the New Zealand economy is more effective in preventing adverse aggregate shocks from becoming adverse unemployment shock. Keywords: unemployment, open economy, structural change, labour market
dc.format.extent 39 s.
dc.language.iso eng
dc.relation.ispartofseries Bank of Finland Research Discussion Papers
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject työttömyys
dc.subject Suomi
dc.subject Uusi-Seelanti
dc.subject avoin talous
dc.subject työmarkkinat
dc.subject SP
dc.title Unemployment in a small open economy : Finland and New Zealand
dc.type Sarjajulkaisu
dc.identifier.urn URN:NBN:fi:bof-20140807648
dc.series.name Suomen Pankin keskustelualoitteita
dc.series.year 1999
dc.series.number 10/1999
dc.series.sortingnumber 10
dc.date.publication 28.7.1999

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