The causes of Spanish unemployment : a structural VAR approach

Abstract

We review the causes of Spanish unemployment by estimating a simple macroeconomic model using the VAR methodology. In our model, the labour market presents full hysteresis, hypothesis which provides a sufficient number of identifying restrictions to be imposed in the estimation. Our results suggest that the combination of a plausible mixture of different types of shocks and extreme persistence mechanisms in the transmission of them explains the performance of the Spanish labour market in the last two decades.