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Unemployment in Greece: evidence from Greek regions

  • Evangelia Papapetrou

    (Bank of Greece and University of Athens)

  • Dimitrios Bakas

    (University of Athens)

The purpose of the paper is to examine the nature of Greek unemployment allowing for cross-sectional dependence among Greek regions and for the presence of structural breaks. The paper contributes to the literature assessing the stochastic properties of Greek regional unemployment rates using recently developed and more powerful panel unit-root tests, such as the Lagrange Multiplier (LM) panel unit root test of Im et al. (2010), that allow for level and trend breaks, heterogeneity and cross-sectional dependence in the panel. The results show that in all cases, after taking into account the fact that regional unemployment rates in Greece are subject to a structural break both in mean and the slope of the series, the null hypothesis of a unit root is not rejected, indicating that the Greek regional unemployment series are non-stationary with the presence of a structural break.

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Paper provided by Bank of Greece in its series Working Papers with number 146.

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Length: 28
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:bog:wpaper:146
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  1. Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
  2. Matteo Lanzafame, . "The Nature of Regional Unemployment in Italy," Regional and Urban Modeling 283600051, EcoMod.
  3. Dimitri G. Demekas & Zenon Kontolemis G., 1996. "Unemployment in Greece: A Survey of the Issues," IMF Working Papers 96/91, International Monetary Fund.
  4. Christian Dreger & Hans-Eggert Reimers, 2009. "Hysteresis in the development of unemployment: the EU and US experience," Spanish Economic Review, Springer, vol. 11(4), pages 267-276, December.
  5. Christophe Hurlin, 2007. "What would Nelson and Plosser find had they used panel unit root tests?," Working Papers halshs-00156685, HAL.
  6. Miguel A. León-Ledesma & Peter McAdam, 2004. "Unemployment, Hysteresis And Transition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(3), pages 377-401, 08.
  7. Sarafidis, Vasilis & Wansbeek, Tom, 2010. "Cross-sectional Dependence in Panel Data Analysis," MPRA Paper 20367, University Library of Munich, Germany.
  8. Hyungsik Roger MOON & Benoit PERRON, 2002. "Testing For A Unit Root In Panels With Dynamic Factors," Cahiers de recherche 18-2002, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  9. Badi H. Baltagi & Georges Bresson & Alain Pirotte, 2006. "Panel Unit Root Tests and Spatial Dependence," Center for Policy Research Working Papers 88, Center for Policy Research, Maxwell School, Syracuse University.
  10. Dimitris K. Christopoulos & Miguel A. León-Ledesma, 2007. "Unemployment hysteresis in EU countries: what do we really know about it?," Journal of Economic Studies, Emerald Group Publishing, vol. 34(2), pages 80-89, May.
  11. Roed, Knut, 1997. " Hysteresis in Unemployment," Journal of Economic Surveys, Wiley Blackwell, vol. 11(4), pages 389-418, December.
  12. Aninday Banerjee & Markus Eberhardt & J James Reade, 2010. "Panel Estimation for Worriers," Discussion Papers 10-33, Department of Economics, University of Birmingham.
  13. Theodore Mitrakos & Daphne Nicolitsas, 2006. "Long-term Unemployment in Greece: developments, incidence and composition," Economic Bulletin, Bank of Greece, issue 27, pages 7-41, July.
  14. Karlsson, Sune & Löthgren, Mickael, 1999. "On the power and interpretation of panel unit root tests," SSE/EFI Working Paper Series in Economics and Finance 299, Stockholm School of Economics.
  15. Roed, Knut, 1996. "Unemployment Hysteresis--Macro Evidence from 16 OECD Countries," Empirical Economics, Springer, vol. 21(4), pages 589-600.
  16. Leon-Ledesma, Miguel A, 2002. "Unemployment Hysteresis in the US States and the EU: A Panel Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 54(2), pages 95-103, April.
  17. Apergis, Nicholas, 2005. "An estimation of the natural rate of unemployment in Greece," Journal of Policy Modeling, Elsevier, vol. 27(1), pages 91-99, February.
  18. Hadri, Kaddour & Kurozumi, Eiji, 2008. "A Simple Panel Stationarity Test in the Presence of Cross-Sectional Dependence," CCES Discussion Paper Series 7, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  19. Margarita Katsimi, 2000. "Stochastic shifts in the natural rate of unemployment: evidence from Greece," Applied Economics Letters, Taylor & Francis Journals, vol. 7(4), pages 239-242.
  20. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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