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Decomposing Beveridge Curve Dynamics By Correlated Unobserved Components

Klinger, Sabine ; Weber, Enzo


Our paper provides a consistent framework to study the structural or cyclical nature of Beveridge curve (BC) dynamics: We connect equilibrium unemployment theory to a flexible multivariate unobserved components model. We disentangle permanent and transitory components of all series determining the BC and its position. Cointegration and identification are addressed. The German curve is an ideal ...


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