Fig. 15

Impulse responses following a shock on the inflow rate (s) to unemployment (in p.p.). a Inflow rate (s) to unemployment. b Outflow rate (f) from unemployment. c Actual and implied unemployment rate. Notes: The solid black line represents the response of the variable of interest to shock on the inflow rate (s) to unemployment; the two round-dotted black lines are the 68 % confidence bands. The solid orange line represents the implied unemployment rate response constructed using Eq. (11) based on the inflow and outflow impulse responses and the sample averages of s and f. The exogenous increase in s is modeled to be 1 percentage point. Standard errors have been calculated by bootstrapping the residuals (1000 replications were performed)