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Unemployment hysteresis in Australia: evidence using nonlinear and stationarity tests with breaks

  • Aviral Tiwari

    ()

This study is an attempt to test the hysteresis versus the natural rate hypothesis in unemployment rate using time series data of the Australia covering the period 1978: 2–2010:12. For the analysis, we employed nonlinear as well as different linear tests (with incorporation of endogenously determined structural breaks) of unit root. We found that the Australian unemployment rate is nonlinear process, has a partial unit root and trend reverting. Therefore, we provide support for the structuralist hypothesis. This finding provides the importance of accounting for exogenous shocks in the series and gives support to the shifting natural-rate hypothesis of the Australian unemployment rate. Copyright Springer Science+Business Media Dordrecht 2014

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File URL: http://hdl.handle.net/10.1007/s11135-012-9795-z
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Article provided by Springer in its journal Quality & Quantity.

Volume (Year): 48 (2014)
Issue (Month): 2 (March)
Pages: 681-695

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Handle: RePEc:spr:qualqt:v:48:y:2014:i:2:p:681-695
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  11. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
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  16. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76, pages 678.
  17. Aviral Kumar Tiwari, 2012. "An Error-Correction Analysis Of India-Us Trade Flows," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(1), pages 29-51, March.
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  24. Dipak Ghosh & Swarna (Bashu) Dutt, . "Nonstationarity and Nonlinearity in the US Unemployment Rate: A Re-examination," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center.
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  27. George Kapetanios, 2005. "Unit-root testing against the alternative hypothesis of up to m structural breaks," Journal of Time Series Analysis, Wiley Blackwell, vol. 26(1), pages 123-133, 01.
  28. Tiwari, Aviral Kumar, 2012. "On the Dynamics of Energy Consumption, CO2 Emissions and Economic Growth: Evidence from India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 47(1), pages 57-87.
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