LABOUR MARKET FRICTIONS IN THE VISEGRAD GROUP

In this paper we examine the dynamical and structural properties of the economies of the Visegrad Group. Our focus lies mainly in the investigation and comparison of the labour market frictions present in these countries. We estimate a dynamic stochastic general equilibrium model for small open economies on four data sets between periods 2002Q1 and 2015Q4. The selected model contains several labour market and other types of rigidities, like wage and price adjustment costs. The explicitly defined labour market consists of a search and matching function and a Nash-type wage and working hours bargaining process. A switching mechanism is implemented for the Slovak Republic to differentiate between autonomous and joint monetary policies for periods before and after 2009. The model matches the behaviour of real macroeconomic variables relatively well. Our results suggest that the wage rigidities are weaker compared to the price frictions in all examined economies. Also, in most cases the monetary authority is capable of influencing the labour market variables. Finally, all countries except Poland show signs of high degree of openness.