The Asian Financial Crisis and the Natural Rate of Unemployment: Estimates from a Structural Var for the Newly Industrializing Economies of Asia

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Abstract

We use a structural vector autoregressive model to estimate the natural rate of unemployment for Hong Kong, Korea, Singapore and Taiwan for the period 1982–2000. Our results show that the dramatic rise in the unemployment rate observed in Hong Kong and Korea was mainly the result of demand shocks rather than structural changes, while in Singapore the unemployment rate rise reflected almost entirely a rise in the natural rate. Taiwan's natural rate has been relatively stable. We offer explanations for these different results in terms of the different economic characteristics (particularly labor market features) of the four countries.
Original languageEnglish
Pages (from-to)45-64
JournalPacific Economic Review
Volume9
Issue number1
DOIs
Publication statusPublished - 2004

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Taiwan
Singapore
Natural rate of unemployment
Natural rate
Asian financial crisis
Structural VAR
Unemployment rate
Asia
Korea
Hong Kong
Demand shocks
Structural change
Labour market
Economics
Vector autoregressive model

Cite this

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title = "The Asian Financial Crisis and the Natural Rate of Unemployment: Estimates from a Structural Var for the Newly Industrializing Economies of Asia",
abstract = "We use a structural vector autoregressive model to estimate the natural rate of unemployment for Hong Kong, Korea, Singapore and Taiwan for the period 1982–2000. Our results show that the dramatic rise in the unemployment rate observed in Hong Kong and Korea was mainly the result of demand shocks rather than structural changes, while in Singapore the unemployment rate rise reflected almost entirely a rise in the natural rate. Taiwan's natural rate has been relatively stable. We offer explanations for these different results in terms of the different economic characteristics (particularly labor market features) of the four countries.",
author = "Nicolaas Groenewold and Sam Tang",
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AU - Tang, Sam

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N2 - We use a structural vector autoregressive model to estimate the natural rate of unemployment for Hong Kong, Korea, Singapore and Taiwan for the period 1982–2000. Our results show that the dramatic rise in the unemployment rate observed in Hong Kong and Korea was mainly the result of demand shocks rather than structural changes, while in Singapore the unemployment rate rise reflected almost entirely a rise in the natural rate. Taiwan's natural rate has been relatively stable. We offer explanations for these different results in terms of the different economic characteristics (particularly labor market features) of the four countries.

AB - We use a structural vector autoregressive model to estimate the natural rate of unemployment for Hong Kong, Korea, Singapore and Taiwan for the period 1982–2000. Our results show that the dramatic rise in the unemployment rate observed in Hong Kong and Korea was mainly the result of demand shocks rather than structural changes, while in Singapore the unemployment rate rise reflected almost entirely a rise in the natural rate. Taiwan's natural rate has been relatively stable. We offer explanations for these different results in terms of the different economic characteristics (particularly labor market features) of the four countries.

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