Unemployment hysteresis in Central Asia

Fumitaka Furuoka

MPRA Paper from University Library of Munich, Germany

Abstract: Unemployment hysteresis is an important but rather controversial issue in applied economics because the existence of hysteresis in unemployment rate poses a challenge to a central building-block of macroeconomic theory. The current paper chooses five Central Asian countries, namely Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, as a case study to examine the unemployment hysteresis for the period of 1991-2012. The number of observation is 22. In order to overcome the insufficient data, this paper uses the Bootstrap method to estimate the critical values (Park, 2003). For the purpose of empirical analysis, this paper uses the SURADF tests (Breuer et al., 2002) and the Fourier ADF tests (Enders and Lee, 2012). The univariate unit root tests indicates that unemployment rate in Kazakhstan, Kyrgyzstan and Tajikistan can be the stationary process and unemployment rates in Turkmenistan and Uzbekistan can be the unit root process. The panel unit root indicates that unemployment rate in the Central Asia can be the stationary process. Overall, the current study concludes that unemployment rates in Central Asia can be best described as stationary process in line with the natural rate hypothesis.

Keywords: Unemployment hysteresis; Central Asia; unit root; nonlinear (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Date: 2014-11-30
New Economics Papers: this item is included in nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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