How to decode Unemployment Persistence: An econometric framework for identifying and comparing the sources of persistence

Niels Møller ()

MPRA Paper from University Library of Munich, Germany

Abstract: Most econometric analyses of persistence focus on the existence of non-stationary unemployment but not the origin of this. The present research contains a multivariate econometric framework for identifying and comparing different sources of unemployment persistence (e.g. hysteresis versus a slowly moving equilibrium rate). A small example, considering historical data (1988-2006) for the UK, demonstrates how the method can be applied in practice. Although this primarily serves as an illustration, the evidence clearly suggests that persistence was due to a slowly moving equilibrium (driven by the price of crude oil) and not to hysteresis mechanisms.

Keywords: Cointegration; Equilibrium unemployment; Macroeconomic persistence; UK unemployment; Unemployment hysteresis (search for similar items in EconPapers)
JEL-codes: C1 C32 E24 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Understanding Unemployment Hysteresis: A system-based econometric approach to changing equilibria and slow adjustment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:70058

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