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Evaluating The Persistence And Structuralist Theories Of Unemployment

Author

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  • Coakley, Jerry
  • Fuertes, Ana María
  • Zoega, Gylfi

Abstract

This paper uses a threshold autoregressive (TAR) framework to assess the relative importance of structural breaks and asymmetric persistence in accounting for the post-war unemployment experience. In comparing unemployment patterns across time periods and countries, we take the US as a representative flexible labour market and Germany as an archetypically inflexible one, with the UK occupying an intermediate position. Significant breaks are detected in the UK and German series around 1980 suggesting a sharp increase in their respective natural rates. Evidence of asymmetries is also found in the dynamics of unemployment with rapid mean reversion following booms and persistence in the wake of recessions. We conclude that shifts in the natural rate explain differences over longer periods such as decades while asymmetric persistence can shed light on the short to medium run differences.

Suggested Citation

  • Coakley, Jerry & Fuertes, Ana María & Zoega, Gylfi, 2000. "Evaluating The Persistence And Structuralist Theories Of Unemployment," CEPR Discussion Papers 2438, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2438
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marika Karanassou & Hector Sala & Dennis J. Snower, 2010. "Phillips Curves And Unemployment Dynamics: A Critique And A Holistic Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 24(1), pages 1-51, February.
    2. Ron Smith & Gylfi Zoega, 2004. "Global Shocks and Unemployment Adjustment," Birkbeck Working Papers in Economics and Finance 0401, Birkbeck, Department of Economics, Mathematics & Statistics.
    3. Spyros Andreopoulos, 2006. "The real interest rate, the real oil price, and US unemployment revisited," Bristol Economics Discussion Papers 06/592, Department of Economics, University of Bristol, UK.
    4. Neugart, Michael, 2004. "Complicated dynamics in a flow model of the labor market," Journal of Economic Behavior & Organization, Elsevier, vol. 53(2), pages 193-213, February.

    More about this item

    Keywords

    asymmetries; Bootstrap; Momentum TAR Process; Structural Breaks;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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