Multiple equilibria in Spanish unemployment
Abstract The dynamics of Spanish unemployment in the last thirty years has been characterized by a high and persistent unemployment period (from 1982 to 1999) and by two transition periods, one of massive employment destruction (from 1972 to 1982) and one of massive employment creation (from 1999 to 2007). After that, unemployment has raised again. This behavior is well captured by a non-linear smooth transition autoregressive (STAR) model and our analysis indicates the existence of two regimes with a fast transition between them: a high regime with an equilibrium value of unemployment of 18.3% and a low regime with a equilibrium value of 7.6%.
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