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GLOBAL MACROECONOMETRIC APPROACH TO MODELLING UNEMPLOYMENT IN THE CSEE COUNTRIES

The paper models unemployment in the group of selected Central and Southeast European (CSEE) countries using a global macroeconometric framework to account for the dynamics in the labour markets of the neighbouring countries. Traditionally, being the largest labour market in the region, Germany attracts workers from the CSEE countries as it offers higher salaries and provides better working conditions in comparison to their home economies. To appropriately account for possible spillovers from the German economy and its labour market the global model employed in this paper includes Germany as the dominant economy. The results of the study indicate that the CSEE countries labour markets are highly influenced by the dynamics on the German labour market.

Global VAR; weak exogeneity; GFEVD; unemployment

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