| Abstract:
The main purpose of this paper is to study the effects of macroeconomic shocks on unemployment rate in the context of the Iranian economy. To do so, we use a structural vector autoregressive (SVAR) model along with Impulse-Response Function and Variance Decomposition Method over the period 1966-2007. The overall results indicate that productivity and aggregate demand shocks have significant negative effects on unemployment rate in Iran; however, wage, price and labour supply shocks have significant positive effects on the independent variable in this study.
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