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Hysteresis versus NAIRU and convergence versus divergence: The behavior of regional unemployment rates in Brazil

  • Gomes, Fábio Augusto Reis
  • da Silva, Cleomar Gomes
Registered author(s):

    The aim of this work is to analyze the regional unemployment rate behavior in Brazil. Firstly, unit root tests with structural breaks were used to determine which theoretical framework - hysteresis or NAIRU - is more appropriate to explain the unemployment dynamics not only in six Brazilian metropolitan areas - São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Salvador and Recife - but also at national level. Hysteresis is found to be the best choice in five, but Rio de Janeiro. This indicates a high persistence in the Brazilian regional unemployment rate. Secondly, we investigated whether these five metropolitan regions, characterized by the hysteresis effect, show a stochastic convergence. The latter was found in every case, but Porto Alegre.

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    Article provided by Elsevier in its journal The Quarterly Review of Economics and Finance.

    Volume (Year): 49 (2009)
    Issue (Month): 2 (May)
    Pages: 308-322

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    Handle: RePEc:eee:quaeco:v:49:y:2009:i:2:p:308-322
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620167

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