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Unemployment Hysteresis in Transition Countries: Evidence using Stationarity Panel Tests with Breaks

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  • Mariam Camarero
  • Josep Lluís Carrion-i-Silvestre
  • Cecilio Tamarit

Abstract

The authors test hysteresis versus the natural rate hypothesis in unemployment using panel data for transition countries covering the period 1991:1-2003:11. The advantages of the stationarity tests applied is that they exploit the cross-section variations of the series and, additionally, allow for a different number of endogenous breakpoints in the unemployment series. They do not impose independence on the panel members, so that the critical values are simulated based on their specific panel sizes and time periods. The findings stress the importance of accounting for exogenous shocks in the series and give support to the shifting natural-rate hypothesis of unemployment for all the countries analyzed. Copyright © 2008 The Authors. Journal compilation © 2008 Blackwell Publishing Ltd.

Suggested Citation

  • 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, August.
  • Handle: RePEc:bla:rdevec:v:12:y:2008:i:3:p:620-635
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    Cited by:

    1. Emilio Congregado & Antonio Golpe & Simon Parker, 2012. "The dynamics of entrepreneurship: hysteresis, business cycles and government policy," Empirical Economics, Springer, pages 1239-1261.
    2. Kula Ferit & Aslan Alper, 2010. "Hysteresis vs. Natural Rate of Unemployment: One, the Other, or Both?," South East European Journal of Economics and Business, De Gruyter Open, pages 91-94.
    3. Ferit KULA & Alper ASLAN, 2014. "Unemployment Hysteresis in Turkey: Does Education Matter?," International Journal of Economics and Financial Issues, Econjournals, pages 35-39.
    4. Cuestas, Juan C. & Gil-Alana, Luis A. & Staehr, Karsten, 2011. "A further investigation of unemployment persistence in European transition economies," Journal of Comparative Economics, Elsevier, pages 514-532.
    5. Juan Carlos Cuestas & Luis A. Gil-Alana, 2011. "Unemployment hysteresis, structural changes, non-linearities and fractional integration in European transition economies," Working Papers 2011005, The University of Sheffield, Department of Economics, revised Feb 2011.
    6. Giray Gozgor, 2013. "Testing Unemployment Persistence in Central and Eastern European Countries," International Journal of Economics and Financial Issues, Econjournals, pages 694-700.
    7. Kula Ferit & Aslan Alper, 2010. "Hysteresis vs. Natural Rate of Unemployment: One, the Other, or Both?," South East European Journal of Economics and Business, De Gruyter Open, pages 91-94.
    8. Rusinova, Desislava & Lipatov, Vilen & Heinz, Frigyes Ferdinand, 2015. "How flexible are real wages in EU countries? A panel investigation," Journal of Macroeconomics, Elsevier, pages 140-154.
    9. Dobson, Stephen & Ramlogan-Dobson, Carlyn, 2010. "Is there a trade-off between income inequality and corruption? Evidence from Latin America," Economics Letters, Elsevier, pages 102-104.
    10. Ghoshray, Atanu & Stamatogiannis, Michalis P., 2015. "Centurial evidence of breaks in the persistence of unemployment," Economics Letters, Elsevier, vol. 129(C), pages 74-76.
    11. Emilio Congregado & Antonio Golpe & Simon Parker, 2012. "The dynamics of entrepreneurship: hysteresis, business cycles and government policy," Empirical Economics, Springer, pages 1239-1261.
    12. Fosten, Jack & Ghoshray, Atanu, 2011. "Dynamic persistence in the unemployment rate of OECD countries," Economic Modelling, Elsevier, vol. 28(3), pages 948-954, May.
    13. repec:spr:empeco:v:53:y:2017:i:4:d:10.1007_s00181-016-1196-z is not listed on IDEAS
    14. Juan Carlos Cuestas & Javier Ordonez, 2011. "Unemployment and common smooth transition trends in Central and Eastern European Countries," Economic Issues Journal Articles, Economic Issues, vol. 16(2), pages 39-52, September.

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