Structural unemployment and the output gap in Germany : evidence from an SVAR analysis within a hysteresis framework

Ulrich Fritsche and Camille Logeay

The German unemployment rate shows strong signs if non-stationarity over the course of the previous decades. This is in line with an insider-outsider model under full hysteresis. We applied a "theory-guided view" to the data using the structural VAR model as developed by Balmaseda, Dolado and López-Salido (2000) allowing for full hysteresis on the labour market. Our identification of the model implies long-lasting output gaps for Germany – especially for the disinflation period of the 1980s.

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Year of publication:	November 2002
Authors:	Fritsche, Ulrich ; Logeay, Camille
Publisher:	Berlin, Germany : DIW Berlin, German Institute for Economic Research
Subject:	Structural unemployment \| output gap \| structural VAR \| insider-outsider model \| Strukturelle Arbeitslosigkeit \| Konjunktur \| Business cycle \| Kapazitätsauslastung \| Capacity utilization \| Arbeitsmarkt \| Labour market \| Insider-Outsider-Theorie \| Insider-outsider theory \| VAR-Modell \| VAR model \| Schätzung \| Estimation \| Deutschland \| Germany \| 1970-1990