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Hysteresis and Nairu in the Euro Area

Camille Logeay and Silke Tober

No 04-2005, IMK Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper analyses the Nairu in the Euro Area and the influence that hysteresis had on its development. Using the Kalman-filter technique we find that the Nairu has varied considerably since the early seventies. The Kalman-filter technique is applied here using explicit exogenous variables. In order to test for hysteresis, the dependence of the Nairu on actual unemployment and long-term unemployment is estimated and found to be significant for the Euro Area and Germany respectively. The existence of hysteresis effects implies the possibility of a long-run non-superneutrality of monetary policy.

Keywords: Nairu; hysteresis; Kalman Filter; Phillips curve; superneutrality (search for similar items in EconPapers)
JEL-codes: C32 E32 E52 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2005-07
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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Journal Article: HYSTERESIS AND THE NAIRU IN THE EURO AREA (2006) Downloads
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