A Model for Estimation of NAIRU Extended by Demand Shocks and its Application to Business Cycle Analysis in the Labour Market in Hungary and Poland

Article seeks to extend the Standard Gordon's " Triangle " model with demand shocks. The demand shocks are represented by a newly derived Current discount indicator (CDI). The recession on the labour market in Hungary and Poland was influenced by the growth of future consumption preferences of consumers. Negative gaps of unemployment increased during the recession only in Hungary. Short period subsequent boom in Hungary is linked with excessive pessimism of consumers what reduced unemployment positive gap and shortened the period with positive gape. In Poland the negative vision of future development in the economy resulted in shortening the period of boom. Policymakers should create more positive expectations and prevent to transfer negative emotions on the labour market.