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Unemployment hysteresis in Australia: evidence using nonlinear and stationarity tests with breaks

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  • Aviral Tiwari

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Abstract

This study is an attempt to test the hysteresis versus the natural rate hypothesis in unemployment rate using time series data of the Australia covering the period 1978: 2–2010:12. For the analysis, we employed nonlinear as well as different linear tests (with incorporation of endogenously determined structural breaks) of unit root. We found that the Australian unemployment rate is nonlinear process, has a partial unit root and trend reverting. Therefore, we provide support for the structuralist hypothesis. This finding provides the importance of accounting for exogenous shocks in the series and gives support to the shifting natural-rate hypothesis of the Australian unemployment rate. Copyright Springer Science+Business Media Dordrecht 2014

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Bibliographic Info

Article provided by Springer in its journal Quality & Quantity.

Volume (Year): 48 (2014)
Issue (Month): 2 (March)
Pages: 681-695

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Handle: RePEc:spr:qualqt:v:48:y:2014:i:2:p:681-695

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Web page: http://www.springer.com/economics/journal/11135

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Related research

Keywords: Unemployment rate; Hysteresis; Threshold autoregressive model; Nonlinear unit root; Structural breaks;

References

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