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Unemployment hysteresis, structural changes, non-linearities and fractional integration in Central and Eastern Europe

Juan Cuestas and Luis Gil-Alana ()

NBS Discussion Papers in Economics from Economics, Nottingham Business School, Nottingham Trent University

Abstract: In this paper we aim to analyse the dynamics of unemployment in a group of Central and Eastern European Countries (CEECs). The CEECs are of special importance for the future of the European Union, given that most of them have recently become member states, and labour flows have been seen to rise with their accession. By means of unit root tests incorporating structural changes and nonlinearities, as well as fractional integration, we find that the unemployment rates for the CEECs are mean reverting processes, which is consistent with the NAIRU hypothesis, although shocks tend to be highly persistent.

Keywords: Unemployment; NAIRU; hysteresis; unit roots; fractional integration (search for similar items in EconPapers)
JEL-codes: C32 E24 (search for similar items in EconPapers)
Date: 2009-11
New Economics Papers: this item is included in nep-lab and nep-tra
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http://www.ntu.ac.uk/__data/assets/pdf_file/0019/3 ... yment-hysteresis.pdf First version, 2009 (application/pdf)

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