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Labor Market Hysteresis and Turkish New Keynesian Phillips Curve (NKPC) (2000-2012)

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  • Leyla Bastav

Abstract

This study aims to analyse Turkish economy for the 2000-2012 term with emphasis on labor market hysteresis within the framework of New Keynesian Phillips Curve (NKPC). In this study employment and unemployment series are tested for stationarity and relevant statistical analysis is realized. Price equations are estimated in the form of New Keynesian Wage Phillips Curve (NKWPC) by OLS with employment (and unemployment) explanatory variables Alternatively NKPC is also estimated by price dependent variable against output gap and growth of output. Statistical analysis and NKPC estimations reveal hysteresis patterns where price dynamics is responsive to rate of increase of output rather than its level. During recessions or busts with increasing unemployment total separations rise and long term unemployment hikes in Turkey. However upward trend in long term unemployment can be reversed with job creation in the economy by appropriate policies. Thus long term unemployment is typically related with the business cycles and/or recessions which is reversible via expansionary policy. There is hardly supporting pattern for labor market rigidities of unemployment persistence in Turkey. See above See above

Suggested Citation

  • Leyla Bastav, 2013. "Labor Market Hysteresis and Turkish New Keynesian Phillips Curve (NKPC) (2000-2012)," EcoMod2013 6240, EcoMod.
    • Handle: RePEc:ekd:004912:6240
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