The view that high unemployment in West Germany and other European countries is caused by a path dependence effect - or … hysteresis effect - is quite popular among economists. However, because of an identification problem, much of the empirical … is argued that in a cointegration framework it is reasonable to define hysteresis as the absence of weak exogeneity of …

In this paper, we argue that credit market imperfections impact not only the level of unemployment, but also its … steady-state unemployment, but also slow down the transitional dynamics. We then provide an empirical illustration based on a … persistence of unemployment. -- Credit markets ; labor markets ; unemployment ; credit constraints ; search frictions …