Gehrke, Britta Lechthaler, Wolfgang Merkl, Christian
Year of Publication:
FAU Discussion Papers in Economics 09/2017
This paper analyzes Germany's unusual labor market experience during the Great Recession. We estimate a general equilibrium model with a detailed labor market block for post-unification Germany. This allows us to disentangle the role of institutions (short-time work, government spending rules) and shocks (aggregate, labor market, and policy shocks) and to perform counterfactual exercises. We identify positive labor market performance shocks (likely caused by labor market reforms) as the key driver for the "German labor market miracle" during the Great Recession.
Great Recession search and matching DSGE short-time work fiscal policy business cycles Germany