Following up on the earlier thread on the reform of the output gap estimation method, this VOXEU article by Andres and Domenech is relevant – here.
Following up on the earlier thread on the reform of the output gap estimation method, this VOXEU article by Andres and Domenech is relevant – here.
3 replies on “Estimating Structural Unemployment”
This post is interesting, and deserves more than one comment.
thank you ! Because in general I do not subscribe to this “no comment” outlet anymore.
And it makes some valuable points.
What I want point out,
1. to use the “structural” as a fudge factor was expected at signing the ESM, at least by me, consciously.
2. if Spain runs its economy with unemployment oscillating between 25% and barely below 9% even in “once in a century” boom times, than the applicability of traditional concepts like various “curves” is somewhat questionable. And you all know, what is coming from a German now :
This is structural, not business cycle : – )
Back to the drawing board!
http://online.wsj.com/article/SB10001424052702304213904579095481787193644.html
Spain must be running its economy in a very unorthodox fashion indeed! Given that its high unemployment rate antedates its membership of the euro, this is entirely credible.
The nearly last sentence at the wsj:
“The reason is the commission’s grim assumption that the “natural” rate of unemployment in Spain—if the economy were operating at full potential—is 23%.”
made me nearly puke my breakfast. What are the left and right governments doing there?