Flexible Fourier unit root test of unemployment for PIIGS countries

Shu-Ching Cheng, Tsung-pao Wu, Kuei-Chiu Lee and Tsangyao Chang

Economic Modelling, 2014, vol. 36, issue C, 142-148

Abstract: In this empirical study, we apply the flexible Fourier unit root test proposed by Enders and Lee (2012) to re-examine the hysteresis hypothesis of unemployment for PIIGS (Portugal, Ireland, Italy, Greece, and Spain) countries over the period from 1960 to 2011. We find that the Fourier unit root test has greater power than a linear method if the true data generating process of unemployment is a stationarity, non-linear process of an unknown form with structural change. The hysteresis in unemployment is confirmed for all PIIGS countries, with the exception of Portugal and Spain, when the Fourier unit root test is conducted.

Keywords: Hysteresis in unemployment; PIIGS countries; Fourier unit root test (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:36:y:2014:i:c:p:142-148

DOI: 10.1016/j.econmod.2013.09.021

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