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Unemployment hysteresis, structural changes, non-linearities and fractional integration in Central and Eastern Europe

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  • Juan Carlos Cuestas
  • Luis A. Gil-Alana

Abstract

In this paper we aim to analyse the dynamics of unemployment in a group of Central and Eastern European Countries (CEECs). The CEECs are of special importance for the future of the European Union, given that most of them have recently become member states, and labour flows have been seen to rise with their accession. By means of unit root tests incorporating structural changes and nonlinearities, as well as fractional integration, we find that the unemployment rates for the CEECs are mean reverting processes, which is consistent with the NAIRU hypothesis, although shocks tend to be highly persistent.

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File URL: http://www.ntu.ac.uk/research/document_uploads/91190.pdf
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Bibliographic Info

Paper provided by Nottingham Trent University, Nottingham Business School, Economics Division in its series Working Papers with number 2009/6.

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Date of creation: Nov 2009
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Handle: RePEc:nbs:wpaper:2009/6

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Web page: http://www.ntu.ac.uk/nbs

Related research

Keywords: Unemployment; NAIRU; hysteresis; unit roots; fractional integration;

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  22. Tito Boeri & Katherine Terrell, 2001. "Institutional Determinants of Labor Reallocation in Transition," William Davidson Institute Working Papers Series 384, William Davidson Institute at the University of Michigan.
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  24. Gil-Alana, Luis A., 2000. "Mean reversion in the real exchange rates," Economics Letters, Elsevier, vol. 69(3), pages 285-288, December.
  25. Mariam Camarero & Josep Lluís Carrion-i-Silvestre & Cecilio Tamarit, 2008. "Unemployment Hysteresis in Transition Countries: Evidence using Stationarity Panel Tests with Breaks," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 620-635, 08.
  26. Luis A. Gil-Alana, 2004. "A joint test of fractional integration and structural breaks at a known period of time," Journal of Time Series Analysis, Wiley Blackwell, vol. 25(5), pages 691-700, 09.
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