| Summary: | The purpose of the paper is to econometrically exploit the characteristics of
unemployment in Serbia upon the start of the 2008 economic crisis. The
methodological framework is based on the cointegrated vector autoregressive
model that consists of the following macroeconomic variables: unemployment
rate, prices, nominal wages and nominal exchange rate. These variables are
unit-root processes and their relationship is examined within the
multivariate cointegrated time series set-up. Following the deductive
modelling approach, we reached the specification that explains unemployment
rate by real wages. The results show the negative consequences of the
economic crisis to the labour market, with an extremely high increase in the
unemployment rate. Strong negative impact of real wages on unemployment rate
is additionally confirmed by its dynamic effects throughout the impulse
response function.
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