How an Export Boom Affects Unemployment
Does trade affect the equilibrium rate of unemployment? To answer this question, we propose a small open economy model that incorporates realistic features of labour markets. The model predicts that a sustained improvement in the terms of trade lowers unemployment. We test this prediction for the ca...
| Main Authors: | , |
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| Format: | Journal Article |
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Elsevier BV * North-Holland
2013
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| Online Access: | http://hdl.handle.net/20.500.11937/9873 |
| _version_ | 1848746075790245888 |
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| author | Gaston, Noel Rajaguru, Gulasekaran |
| author_facet | Gaston, Noel Rajaguru, Gulasekaran |
| author_sort | Gaston, Noel |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Does trade affect the equilibrium rate of unemployment? To answer this question, we propose a small open economy model that incorporates realistic features of labour markets. The model predicts that a sustained improvement in the terms of trade lowers unemployment. We test this prediction for the case of Australia, an economy that is subject to large terms of trade movements. We use a novel technique to estimate the structural model based on a combination of traditional econometric procedures and the calibration of time-varying parameters. Both reduced form and the structural estimates reveal strong evidence that higher export prices, capital accumulation in tradeable goods industries and lower unemployment benefits reduce the equilibrium unemployment rate. |
| first_indexed | 2025-11-14T06:27:29Z |
| format | Journal Article |
| id | curtin-20.500.11937-9873 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T06:27:29Z |
| publishDate | 2013 |
| publisher | Elsevier BV * North-Holland |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-98732018-03-29T09:05:55Z How an Export Boom Affects Unemployment Gaston, Noel Rajaguru, Gulasekaran Dutch disease Equilibrium unemployment rate Calibration Structural model Does trade affect the equilibrium rate of unemployment? To answer this question, we propose a small open economy model that incorporates realistic features of labour markets. The model predicts that a sustained improvement in the terms of trade lowers unemployment. We test this prediction for the case of Australia, an economy that is subject to large terms of trade movements. We use a novel technique to estimate the structural model based on a combination of traditional econometric procedures and the calibration of time-varying parameters. Both reduced form and the structural estimates reveal strong evidence that higher export prices, capital accumulation in tradeable goods industries and lower unemployment benefits reduce the equilibrium unemployment rate. 2013 Journal Article http://hdl.handle.net/20.500.11937/9873 10.1016/j.econmod.2012.09.007 Elsevier BV * North-Holland restricted |
| spellingShingle | Dutch disease Equilibrium unemployment rate Calibration Structural model Gaston, Noel Rajaguru, Gulasekaran How an Export Boom Affects Unemployment |
| title | How an Export Boom Affects Unemployment |
| title_full | How an Export Boom Affects Unemployment |
| title_fullStr | How an Export Boom Affects Unemployment |
| title_full_unstemmed | How an Export Boom Affects Unemployment |
| title_short | How an Export Boom Affects Unemployment |
| title_sort | how an export boom affects unemployment |
| topic | Dutch disease Equilibrium unemployment rate Calibration Structural model |
| url | http://hdl.handle.net/20.500.11937/9873 |