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Asymmetry in the response of unemployment to output changes in Greece: Evidence from hidden co-integration

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  • Koutroulis, Aristotelis
  • Panagopoulos, Yannis
  • Tsouma, Ekaterini

Abstract

In this paper we investigate the relationship between unemployment and output in Greece for a prolonged period of time. We use quarterly data for unemployment and output, spanning the time period from 1990 to 2014. Our aim is to investigate whether unemployment is characterized by an asymmetric behavior to changes in output. In order to do that, we employ the (Granger & Yoon, 2002) hidden co-integration approach which ex ante decomposes the aggregate output and unemployment variables in positive and negative values. Assessing the potential existence of asymmetric effects is essential for the evolution of unemployment following the rebound in output after crises and, hence, the implementation of active labour market policies. Our results indicate that the unemployment rate responds asymmetrically to changes in output.

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  • Koutroulis, Aristotelis & Panagopoulos, Yannis & Tsouma, Ekaterini, 2016. "Asymmetry in the response of unemployment to output changes in Greece: Evidence from hidden co-integration," The Journal of Economic Asymmetries, Elsevier, vol. 13(C), pages 81-88.
    • Handle: RePEc:eee:joecas:v:13:y:2016:i:c:p:81-88
    DOI: 10.1016/j.jeca.2016.03.003
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    2. Vassilis Monastiriotis & Angelo Martelli, 2021. "Crisis, Adjustment and Resilience in the Greek Labor Market: An Unemployment Decomposition Approach," International Regional Science Review, , vol. 44(1), pages 85-112, January.
    3. Umair Kashif & Junguo Shi & Snovia Naseem & Muhammad Ayaz & Rehan Sohail Butt & Waris Ali Khan & Mamdouh Abdulaziz Saleh Al-Faryan, 2023. "Do agricultural commodity prices asymmetrically affect the performance of value-added agriculture? Evidence from Pakistan using a NARDL model," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    4. Ousama Ben-Salha & Zouhair Mrabet, 2019. "Is Economic Growth Really Jobless? Empirical Evidence from North Africa," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(4), pages 598-624, December.
    5. Louail Bilal & Ben Haj Hamida Hayet, 2021. "Asymmetry Relationship between Economic Growth and Unemployment Rates in the Arab countries: Application of the OKUN Law during 1960-2017," Management, Sciendo, vol. 25(2), pages 1-21, December.
    6. taiebnia , Ali & rahmani , Teymur & Mohammadali , Hanieh, 2019. "Profit Rate Stickiness and Bank Specific Characteristics: Empirical Study of Panel Hidden Cointegration," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 14(1), pages 1-25, January.
    7. Ayman Mnasri & Zouhair Mrabet & Mouyad Alsamara, 2023. "A new quadratic asymmetric error correction model: does size matter?," Empirical Economics, Springer, vol. 65(1), pages 33-64, July.
    8. Muhammad Saeed Meo & Bezon Kumar & Sumayya Chughtai & Vina Javed Khan & Muhammad Khyzer Bin Dost & Qasim Ali Nisar, 2023. "Impact of Unemployment and Governance on Poverty in Pakistan: A Fresh Insight from Non-linear ARDL Co-integration Approach," Global Business Review, International Management Institute, vol. 24(5), pages 1007-1024, October.
    9. Abdul Rauf & Ameer Muhammad Aamir Abbas & Asim Rafiq & Saifullah Shakir & Saira Abid, 2022. "The Impact of Political Instability, Food Prices, and Crime Rate on Tourism: A Way toward Sustainable Tourism in Pakistan," Sustainability, MDPI, vol. 14(24), pages 1-17, December.
    10. Nebot, César & Beyaert, Arielle & García-Solanes, José, 2019. "New insights into the nonlinearity of Okun's law," Economic Modelling, Elsevier, vol. 82(C), pages 202-210.
    11. Monastiriotis, Vassilis & Martelli, Angelo, 2021. "Crisis, adjustment and resilience in the Greek labor market: an unemployment decomposition approach," LSE Research Online Documents on Economics 115066, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Unemployment and output relationship; Hidden co-integration; Crouching error correction model;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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