Hysteresis in unemployment: Fact or fiction?

A stylized fact of European unemployment dynamics is one of extreme persistence and possible unit root behavior. This has led to a major reconsideration of the natural rate paradigm. We apply the Kalman filter to estimate the natural rate of unemployment for Germany and France. When the moving natural rate model is tested against the alternative of a unit root process, the unit root hypothesis is resoundingly rejected.

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Year of publication:	2012
Authors:	Srinivasan, Naveen ; Mitra, Pratik
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 115.2012, 3, p. 419-422
Publisher:	Elsevier
Subject:	Hysteresis \| Natural rate of unemployment \| Kalman filter

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Type of publication:	Article
Classification:	E2 - Consumption, Saving, Production, Employment, and Investment ; J4 - Particular Labor Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010572263