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Does Hysteresis Exist in Unemployment? New Findings from Fourteen Regions of the Czech Republic

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  • Fumitaka FURUOKA

    (Asia-Europe Institute, University of Malaya)

Abstract

The present study chose 14 regions of the Czech Republic as case studies to examine the existence of unemployment hysteresis. To carry out the empirical analysis, it used the SURADF test and the FADF test. The empirical findings from the ADF tests suggested that unemployment in all 14 regions could be described as a non-stationary process. However, the results obtained from the more powerful SURADF test and the non-linear FADF test indicated that the unemployment rates in nine regions could have a unit root in accordance with the hysteresis hypothesis. These regions are Prague-city (Praha), Plzen (Plzenský), Karlovy Vary (Karlovarský), Ústí (Ústecký), Liberec (Liberecký), Hradec Králové (Královohradecký), Pardubice (Pardubický), South Moravia (Jihomoravský) and Olomouc (Olomoucký). By contrast, unemployment in the remaining five regions, namely Central Bohemia (Stredoceský), South Bohemia (Jihoceský), Vysocina, Zlín (Zlínský) and Moravia-Silesia (Moravskoslezský), could be described as a stationary process in line with the natural rate hypothesis. This means that unemployment hysteresis was not found in these five regions.

Suggested Citation

  • Fumitaka FURUOKA, 2014. "Does Hysteresis Exist in Unemployment? New Findings from Fourteen Regions of the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(1), pages 59-78, February.
    • Handle: RePEc:fau:fauart:v:64:y:2014:i:1:p:59-78
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    Cited by:

    1. Jakub Bechný, 2019. "Unemployment Hysteresis in the Czech Republic," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(5), pages 532-546.
    2. Fumitaka Furuoka, 2015. "Unemployment Hysteresis in the “Nordic Kitten”: Evidence from Five Estonian Regions," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 631-642, December.
    3. repec:prg:jnlpep:v:preprint:id:709:p:1-15 is not listed on IDEAS
    4. Burak Güriş & Burcu Yavuz Tiftikçigil & Muhammed Tıraşoğlu, 2017. "Testing for unemployment hysteresis in Turkey: evidence from nonlinear unit root tests," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(1), pages 35-46, January.
    5. Bozena Kaderabkova & Emilie Jasova & Robert Holman, 2020. "Analysis of substitution changes in the Phillips curve in V4 countries over the course of economic cycles," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 9(2), pages 39-54, December.
    6. Ifedolapo Olabisi Olanipekun & Seyi Saint Akadiri & Osundina Olawumi & Festus Victor Bekun, 2017. "Does Labor Market Hysteresis Hold in Low Income Countries?," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 19-23.
    7. Furuoka, Fumitaka, 2014. "Hysteresis in European labour market," MPRA Paper 60946, University Library of Munich, Germany.

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    More about this item

    Keywords

    unemployment hysteresis; natural rate hypothesis; Czech Republic; regional economy;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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