Can the hysteresis hypothesis in Spanish regional unemployment be beaten? New evidence from unit root tests with breaks

García-Cintado, Alejandro; Romero‐Ávila, Diego; Usabiaga, Carlos

doi:10.1016/j.econmod.2015.02.035

Cited by 30 publications

(16 citation statements)

References 57 publications

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“…Hysteresis effect holds for workers with lower educational attainment (primary and secondary school) but rejects for workers with higher educational attainment (post-secondary). Kanaliciakay, Nargeleçekenler, and Yilmaz (2011) More recently, findings from some studies (Garcia-Cintado et al, 2015;Marjanovic et al, 2015;Munir and Ching, 2015;Klinger and Weber, 2016;Marques et al, 2017;Albulescu and Tiwari, 2018;and Caporale and Gil-Alana, 2018) also support hysteresis effect in unemployment, while others (Akdoğan, 2017;Khraief and Azan, 2018;and Xie et al, 2018) reject the hysteresis effect, to mention a few.…”

Section: Review Of Literaturementioning

confidence: 97%

Unemployment hysteresis in Middle East and North Africa countries: panel SUR-based unit root test with a Fourier function

Awolaja

Yaya

et al. 2021

Middle East Development Journal

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Unemployment hysteresis of the Middle East and North African (MENA) countries is investigated under a battery of unit root testing frameworks in the extant literature, including a recently proposed Panel SUR Dickey-Fuller-like unit root test with Fourier and Exponential Smooth Transition Regression (ESTR) nonlinearities. The Fourier function allows for smooth nonlinear breaks, while the ESTR nonlinearity allows for instantaneous breaks. The two nonlinearity types make the recent approach quite appealing. It has, however, been scarcely applied to empirically test unemployment hysteresis hypothesis. Although we find conflicting stances from ADF, FADF and ADF-SB testing frameworks, evidence of unemployment hysteresis effect in Lebanon is consistent across all three tests. The ADF and FADF tests confirm the hysteresis hypothesis in Kuwait and Lebanon, while FADF-SB rejects the unemployment hysteresis hypothesis across all the 19 MENA countries. The results from the KSS and FKSS unit root testing frameworks consistently affirmed the hysteresis effect in Oman and Turkey, while there are mixed stances for Kuwait and Lebanon. The results from SURADF and SURKSS only support the hysteresis hypothesis in Turkey, while the same is confirmed only for Bahrain under the SURFADF and SURFKSS testing frameworks. Unemployment 1 ACKNOWLEDGEMENTS: This research is partly funded by the University of Economics Ho Chi Minh City, Vietnam. This acknowledged by the first named author, Dr OlaOluwa S. Yaya. hysteresis hypothesis is confirmed for 12 (about 63.15% of the total number considered) MENA economies.

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Section: Review Of Literaturementioning

confidence: 97%

Unemployment hysteresis in Middle East and North Africa countries: panel SUR-based unit root test with a Fourier function

Awolaja

Yaya

et al. 2021

Middle East Development Journal

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“…The unemployment time series is generally influenced by seasonality. In the literature, it is very common for researchers to apply a seasonal adjustment to remove the influence of fluctuations in the level of the series and to observe the cyclical, underlying trend and other non-seasonal movements in the series (Akdogan, 2017; Cheng et al , 2012; Garcia-Cintado et al , 2015; Gustavsson and Österholm, 2006; Romero-Ávila and Usabiaga, 2007,etc.). In our empirical analysis, we use seasonally adjusted monthly data on unemployment rates for the 13 countries in transition.…”

Section: Datamentioning

confidence: 99%

What do unit root tests tell us about unemployment hysteresis in transition economies?

Akay

Oskonbaeva

Bülbül

2020

AEA

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Purpose This study aims to examine the hysteresis hypothesis in unemployment using monthly data from 13 countries in transition. Design/methodology/approach Stationarity in the unemployment rate of selected transition economies was analyzed using four different group unit root tests, namely, linear, structural breaks, non-linear and structural breaks and non-linear. Findings The empirical results show that the unemployment hysteresis hypothesis is valid for the majority of transition economies, including Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, the Kyrgyz Republic, Latvia, Lithuania, Poland, Romania and Slovenia. However, the results strongly reject the null hypothesis of unemployment hysteresis for the Kazakhstan and the Slovak Republics. Originality/value This study revealed that, for countries in transition, advanced unit root tests exhibit greater validity when compared to standard tests

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“…Our empirical findings support the hysteresis hypothesis (potential GDP is difference-stationary around a changing mean) and suggest that the 1982 debt crisis and 2000 recession should be considered moments when the Mexican economy suffered persistent structural changes that permanently lowered the level of potential GDP, i.e., hysteresis. It is interesting to note that most empirical works on hysteresis concentrate on non-rejection of the null hypothesis as being evidence of hysteresis (see, inter alia, Akdoğan, 2017;Bahmani-Oskooee, Chang, & Ranjbar, 2018;Furuoka, 2017;García-Cintado, Romero-Ávila, & Usabiaga, 2015). A notable exception can be found in Meng, Strazicich, and Lee (2017), who affirm that deterministic shifts in an otherwise stationary process should also be considered evidence of hysteresis (the structuralist hypothesis).…”

Section: Introductionmentioning

confidence: 99%

Recessions and potential GDP: The case of Mexico

Ventosa‐Santaulària

Hernández‐Román

Amezcua³

2020

Bulletin of Econ Res

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There is growing evidence that deep recessions may have a permanent and negative impact on both the level and growth rate of the actual and potential GDP of developed economies in the medium and long term. We study the growth rate of the potential GDP of Mexico, a middle-income economy, using a modified version of the methodology proposed by Ball (2014) that employs robust time-series techniques to identify shifts and accounts for a diminishing growth rate caused by secular forces rather than crises. We find evidence in favour of the growth rate's being stable around a changing mean. On the one hand, the 1982 debt crisis and 2000 recession coincide with structural changes in the Mexican economy that had a lasting impact (on growth) and permanently lowered potential GDP levels, i.e., strong evidence in favour of the hysteresis hypothesis. On the other, we find no significant damaging effect (on potential GDP) of either the 1995 financial crisis or the Great Recession.

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Can the hysteresis hypothesis in Spanish regional unemployment be beaten? New evidence from unit root tests with breaks

Cited by 30 publications

References 57 publications

Unemployment hysteresis in Middle East and North Africa countries: panel SUR-based unit root test with a Fourier function

Unemployment hysteresis in Middle East and North Africa countries: panel SUR-based unit root test with a Fourier function

What do unit root tests tell us about unemployment hysteresis in transition economies?

Recessions and potential GDP: The case of Mexico

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