Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055630 | Economic Modelling | 2011 | 7 Pages |
Abstract
⺠We consider a novel approach to examine the persistence of the unemployment rate of 6 OECD countries in an historical context to test whether or not the so-called hysteresis phenomenon is present. ⺠The analysis uses a recently developed unit root test to allow for endogenously determined switches in the order of integration thus allowing unemployment to switch between hysteresis and the natural rate theory over history. ⺠In the UK, hysteresis is empirically detected in the Great Depression period and in the time following 1970s, whereas the natural rate theory is detected in the time shortly after World War 2.
Related Topics
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Authors
Jack Fosten, Atanu Ghoshray,