Cyclical Asymmetries in Unemployment Rates: International Evidence
AbstractThis paper investigates to what extent the observed nonlinearities in the unemployment rates of six major developed economies are the response to cyclical asymmetries. Two classes of models are compared: strict smooth transition autoregressions and models where the transition variable is GDP growth, which is considered a more direct indicator of the business cycle. The empirical evidence points out that nonlinearities in unemployment rates are induced by cyclical asymmetries. It is also found that in most countries the unemployment rate looks stationary and reverts to a long-run equilibrium rate in periods of normal growth, while in extreme cyclical situations it tends to become nonstationary as if each extreme cyclical episode had its own path of equilibrium. Copyright International Atlantic Economic Society 2007
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Bibliographic InfoArticle provided by International Atlantic Economic Society in its journal International Advances in Economic Research.
Volume (Year): 13 (2007)
Issue (Month): 3 (August)
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Web page: http://springerlink.metapress.com/link.asp?id=112112
More information through EDIRC
Nonlinearity; STAR models; Business cycle; Unemployment; Unit roots; E32; E24; C52;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
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