This paper utilizes the degree of permanent effects in unemployment rates using a wide array of unit-root testing methods for 19 Euro Area countries over the 1983M1-2019M7 period. First and foremost, we examine the theoretical context of linear hysteresis through the implementation of univariate unit-root tests. Since this may contain some potential issues, we also take into account the presence of structural breaks in unemployment. Moreover, we quantify the initial results within the context of panel unit-root tests whether the hysteresis effects in unemployment are still prevailing for the sample. Our findings show that, in general, we cannot reject the hysteresis hypothesis for the 19 Euro Area countries against the alternative of a natural rate even after controlling for structural breaks. The results are thus compatible with the views on the existence of path-dependence of steady-state equilibrium unemployment.
Hysteresis Unemployment Univariate Unit-Root Test Panel Unit-Root Test Structural Break
Birincil Dil | İngilizce |
---|---|
Konular | Ekonomi |
Bölüm | Articles |
Yazarlar | |
Yayımlanma Tarihi | 31 Aralık 2020 |
Gönderilme Tarihi | 31 Aralık 2020 |
Kabul Tarihi | 1 Ocak 2021 |
Yayımlandığı Sayı | Yıl 2020 Cilt: 4 Sayı: 7 |
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