The description of data sources methodology in this appendix borrows from Chapter 3 of the IMF World Economic Outlook, April 2010.
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Prepared by Leif Lybecker Eskesen. This paper is expected to be published in the Korea and World Economy Journal.
The paper follows the methodology used in Chapter 3 of the April 2010 IMF World Economic Outlook, which was authored by Ravi Balakrishnan, Mitali Das, and Prakash Kannan.
The dynamic (J captures the long-term impact of changes in output on changes in the unemployment rate, which essentially corresponds to the impact of lagged changes in unemployment and output on current changes in unemployment.
The countries included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Korea, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and the United States.
As a measure of employment protection, OECD’s employment protection legislation (EPL) index is used and the generosity of unemployment benefits measures the income replacement rates.
This again follows the approach used in Chapter 3 of the April 2010 IMF World Economic Outlook.
The financial stress index used here was developed by Cardarelli, Elekdag, and Lall. See for example, Journal of Financial Stability, 2010 (forthcoming).