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In this section we simulate values for the endogenous variables of Model 4 under several conditions.1 Frist, we perform a static simulation in order to examine the fit of the model (section 9.1). The latent demand and supply variables implied by this simulation are then used to characterize the development of the Swiss economy in terms of regimes and spillovers (section 9.2). Next, we shall discuss the performance of the Swiss labor market, comparing the unemployment rates derived from the model with official figures (section 9.3). In section 9.4, we evaluate the model as to its tracking performance in a dynamic simulation. Finally, we let certain exogenous variables assume alternative values and figure out short-term and long-term dynamic multipliers (section 9.5).
KeywordsLabor Supply Real Wage Labor Demand Demand Shock Buffer Stock
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