Alternative estimates of NAIRU for the Czech economy: Implications for economic growth and stability
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| Year of publication | 2008 |
| Type | Appeared in Conference without Proceedings |
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| Description | This paper deals with alternative estimates of non-accelerating inflation rate of unemployment (NAIRU) for the Czech economy. NAIRU is meant to be an equivalent with the equilibrium unemployment. Simple hysteretic model of the Phillips curve and multi-equation dynamic macroeconomic model (with rational expectations) are presented. Parameters of these models and paths of the NAIRU are estimated using techniques of Bayesian inference (Gibbs sampler, Metropolis-Hastings algorithm) and filtration (Kalman filter). Trajectory of potential output is estimated in the case of the multi-equation model. Potential output and NAIRU are treated as unobservable states of economic system. Final part of this contribution relates to implications for the sustainable economic growth of the Czech Republic. Estimates indicate hysteretic patterns of the unemployment. The existence of hysteresis has important implications for economic policy and its tools which can be efficient in the battle against unemployment in long run. |
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