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Unemployment dynamics and NAIRU estimates for CEECs : A univariate approach

  • Mariam Camarero
  • Josep Lluis Carrion Silvestre
  • Cecilio Tamarit

    (Universitat de Barcelona)

In this paper we test for the hysteresis versus the natural rate hypothesis on the unemployment rates of the EU new members using unit root tests that account for the presence of level shifts. As a by product, the analysis proceeds to the estimation of a NAIRU measure from a univariate point of view. The paper also focuses on the precision of these NAIRU estimates studying the two sources of inaccuracy that derive from the break points estimation and the autoregressive parameters estimation. The results point to the existence of up to four structural breaks in the transition countries NAIRU that can be associated with institutional changes implementing market-oriented reforms. Moreover, the degree of persistence in unemployment varies dramatically among the individual countries depending on the stage reached in the transition process.

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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 131.

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Length: 56 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:bar:bedcje:2005131
Contact details of provider: Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
Web page: http://www.ere.ub.es

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