We estimate small open economy models with involuntary unemployment using Australian data from 1993 to 2007, focusing on hiring costs and real wage rigidity. We find a strong preference for models with hiring costs, which account for 0.97% of GDP. The data favour models with real over nominal wage rigidity. Impulse responses to technology shocks reveal no productivityemployment puzzle for the p...

The Impact of Macro Systematic Shocks on the Non-Performing Loans: Multivariate Stochastic Volatility Model

Despite success along some dimensions, international business cycle models have difficulty replicating several salient features of international capital flows among developed countries. In particular, net exports and current account balances are much more persistent in the data than in standard models. We account for this feature of the data with a simple onegood two-country model in which tech...

Studies that seek to evaluate the e¤ects of technology shocks often employ structural VARs identi…ed with long-run restrictions. In the presence of a mismatch between the number of lags the data-generating process involves and the number of lags included in the VAR, estimates based on long-run restrictions can be largely biased. In this paper, I o¤er an alternative method that substantially red...

B efore the incidence of the financial crisis in 2008, the financial sector was ignored in the most of business cycles analyses. It was assumed that the financial sector played no independent role in describing business cycle fluctuations and followed the real part of the economy. In recent years, modeling financial frictions have been much considered in business cycles literature. T...