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Hysteresis in Unemployment Rates? A Comparison between Germany and the US

  • Uwe Hassler

    ()

    (Universitaet Frankfurt)

  • Jürgen Wolters

    ()

    (Freie Universitaet Berlin)

In this paper we compare the unemployment dynamics of the US and Germany with monthly data up to 2008. With data from 1971 on the evidence is mixed when applying descriptive methods or formal unit root tests. When allowing for fractional integration, however, we find similar results to the literature in that shocks to US data seem to be transitory while having permanent effects on German unemployment. This difference in hysteresis, however, depends on the sample. Using recursive and rolling techniques we observe that shocks in US subsamples until the mid-nineties are clearly more transitory than in more recent subsamples.We conclude that hysteresis has turned into a dominating feature also on US labour market more recently.

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Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

Volume (Year): 229 (2009)
Issue (Month): 2-3 (June)
Pages: 119-129

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Handle: RePEc:jns:jbstat:v:229:y:2009:i:2-3:p:119-129
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  19. Franz, Wolfgang, 1990. "Hysteresis in economic relationships: An overview," Discussion Papers, Series II 104, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
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  22. Franz, Wolfgang, 1990. "Hysteresis in Economic Relationships: An Overview," Empirical Economics, Springer, vol. 15(2), pages 109-25.
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