Work detail

DSGE modeling of business cycle properties of Czech labor market

Author: Mgr. Daniel Sentivany
Year: 2016 - summer
Leaders: Ing. Aleš Maršál M.A.
Consultants:
Work type: Economic Theory
Masters
Language: English
Pages: 73
Awards and prizes:
Link: https://is.cuni.cz/webapps/zzp/detail/152229/
Abstract: The goal of this thesis is to develop a DSGE model that accounts for the key business cycle
properties of the Czech labor market. We used standard New Keynesian framework for
monetary policy analysis and incorporated an elaborated labor market setup with equilibrium
wage derived via an alternating offer bargaining protocol originally proposed by
Rubinstein (1982) and follow the work of Christiano, Eichenbaum and Trabandt (2013) in
the following steps. Firstly, we calibrated the closed economy model according to values
suited for the Czech economy and found that the model can not only account for higher
volatility of the real wage and unemployment, but can also explain the contemporaneous
rise of both wages and employment after an expansionary shock in the economy, so called
Shimer puzzle (Shimer, 2005a). Secondly, we demonstrated that the alternating offer bargaining
sharing rule outperforms the Nash sharing rule under assumption of using the
hiring costs in our framework (more so while using search costs) and therefore is better
suited for use in larger scale models. Thirdly, we concluded that after estimating the labor
market parameters using the Czech data, our model disproved the relatively low values
linked to the probabilities of unsuccessful bargaining and job destruction.
August 2020
MonTueWedThuFriSatSun
     12
34

56789
10111213141516
17181920212223
24252627282930
31      

Partners

Deloitte

Sponsors

CRIF
McKinsey
Patria Finance