Unemployment Hysteresis in Transition Countries: Evidence using Stationarity Panel Tests with Breaks

Mariam Camarero, Josep Lluís Carrion‐i‐Silvestre and Cecilio Tamarit
Authors registered in the RePEc Author Service: Josep Lluís Carrion-i-Silvestre

Review of Development Economics, 2008, vol. 12, issue 3, 620-635

Abstract: The authors test hysteresis versus the natural rate hypothesis in unemployment using panel data for transition countries covering the period 1991:1–2003:11. The advantages of the stationarity tests applied is that they exploit the cross‐section variations of the series and, additionally, allow for a different number of endogenous breakpoints in the unemployment series. They do not impose independence on the panel members, so that the critical values are simulated based on their specific panel sizes and time periods. The findings stress the importance of accounting for exogenous shocks in the series and give support to the shifting natural‐rate hypothesis of unemployment for all the countries analyzed.

Date: 2008
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