Institutional Quality andUnemployment in OECD Nations: A Panel Causality Test Using aFourier Function

Yildirim Beyazit Cicen ()
Additional contact information
Yildirim Beyazit Cicen: Gumushane University, Postal: Department of Economics,Gumushane/Turkiye

Asian Journal of Applied Economics/ Applied Economics Journal, 2023, vol. 30, issue 1, 17-31

Abstract: A significant impact of institutional quality on sustainable growth has been revealed in recent studies. This study aims to examine the relationship between different institutions and their unemployment rates, considering the legal system and property rights index. A novel and robust panel Fourier causality test was conducted to investigate 38 OECD nations for the relationship between their institutional quality and unemployment rates between the years 2000 and 2018. Regardless of stationarity, the adopted method allowed for the endogenous identification of structures, locations, and forms, and the evaluation of causal relationships. In addition, the Fourier method and the trigonometric terms were used for analyzing the structural changes. According to the findings, a unidirectional causal relationship existed between the quality of the legal system and property rights and the unemployment rates in the investigated nations during the relevant period. In addition, bidirectional causality existed between the variables in Germany and the United States. It is therefore recommended to necessarily improve a nation’s institutional structure to reduce its unemployment rate. Low unemployment rates would be achieved by improving institutional quality, particularly in developing nations. Therefore, policymakers must focus on formulating policies to reduce unemployment in the long run, considering the legal system and property rights of the nation.

Keywords: institutional quality; unemployment rate; panel fourier causality; OECD; legal system; property rights (search for similar items in EconPapers)
JEL-codes: C23 E02 J60 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://so01.tci-thaijo.org/index.php/AEJ/article/view/265702/173538 Full text (application/pdf)
Asian Journal of Applied Economics/ Applied Economics Journal

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:apecjn:0078

Access Statistics for this article

Asian Journal of Applied Economics/ Applied Economics Journal is currently edited by Waleerat Suphannachart

More articles in Asian Journal of Applied Economics/ Applied Economics Journal from Kasetsart University, Faculty of Economics, Center for Applied Economic Research Center for Applied Economics Research, Faculty of Economics, Kasetsart University, Bangkok, 10900, Thailand. Contact information at EDIRC.
Bibliographic data for series maintained by Arannee Tongjankaew ().