Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Discussion: Burda/Hunt Helge Berger In a nutshell • A very good and comprehensive paper that takes a look at data, model, and institutions • Miracle decomposition 40 percent = expectations 20 percent = wage moderation 40 percent = other – private sector working time accounts – public sector short time work –? Questions • • • • • Too narrow look at stylized facts? Asking a lot of expectations? Stress sectoral nature of shock enough? Missing a longer term trend? Coherent story including all relevant institutions? Only DEU vs. US? Boom/bust countries vs. others! 18 16 Peak-to-trough declines in output and employment 14 12 10 8 Real GDP Total employment 6 4 2 0 Note: Calculated as the percent-difference between peak and trough during 2007Q1-2010Q3. (Some qualifications…) Actual vs. predicted change in unemployment (in ppts., based on WEO, 2010, ch. 3) Actual change Predicted change Germany Norway Japan Italy Switzerland Netherlands Belgium Portugal France New Zealand Sweden Greece Austria Denmark Canada Finland UK US Ireland Spain 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 Note: Based on figure 3.8 in WEO (2010). The predicted changes in unemployment are based on Okun's law specifications that include additional control variables, including measures of financial, housing and equity market stress. Source: Schindler (2011). Expectations over-stressed? • Firms first underestimate the resilience of the German economy (explaining ‘underhiring’ prior to the crisis)… • …but then are firmly convinced that the “great recession” will be quite short (explaining ‘underfiring’ during the crisis) • Too strong assumptions? Sectoral shock under-stressed? • For DEU, shock was very specific • Would expectations have mattered as much in services sector? • Manufacturing – Longer planning horizon – Larger skilled worker constraint – Higher capacity for time accounts Missing an improving trend… 12 11 Actual and simulated unemployment paths under different steady-state assumptions 10 9 8 Unemployment rate (actual) 5.3% 6.0% 7.0% 8.1% (historical average) 7 6 5 Simulations* 2010Q3 2010Q1 2009Q3 2009Q1 2008Q3 2008Q1 2007Q3 2007Q1 2006Q3 2006Q1 2005Q3 2005Q1 2004Q3 2004Q1 2003Q3 2003Q1 2002Q3 2002Q1 2001Q3 2001Q1 2000Q3 2000Q1 4 Note: Hypothetical paths are model-based transition paths under the assumption that the Hartz IV reforms lowered the structural (steady-state) unemployment rate to various levels. See text for details. Source: Schindler (2011), Lam (2011) *Search model: u_t+1 = u_t (1-a) + (1-u_t) d (w/ d=1/2; u_ss; a) …missing employment impact? • Counterfactual would be “better” than actual employment figures, leading to a larger notional loss during ‘grand recession’ • Estimates: – Pre-crisis unemployment = 7.2 percent – Crisis peak (so far): 7.6 percent – Simulated: about 8.2 percent Missing institutions? • Fiscal policy, unions,… • Labor courts (B/Danninger 2006; B/Neugart 2011a/b)