Testing Unemployment Persistence in Central and Eastern European Countries

Authors

  • Giray Gozgor Dogus University

Abstract

This study investigates whether stochastic properties of the unemployment rate in ten Central and Eastern European Countries (CEE) countries: Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia can be explained by the non-accelerating inflation rate of unemployment or the hysteresis hypotheses. We primarily show the cross-sectional dependence in unemployment rates, and then apply panel-based unit root tests that take cross-section dependence into account. The empirical findings indicate that there is no mean-reverting process in unemployment rates for ten CEE countries. Thus the results provide evidences for validity of the hysteresis hypothesis—unemployment persistence—in related CEE countries.

Keywords: Unemployment persistence; Panel-based unit root tests; Cross-section dependence

JEL Classification: C23; J64

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Published

2013-06-14

How to Cite

Gozgor, G. (2013). Testing Unemployment Persistence in Central and Eastern European Countries. International Journal of Economics and Financial Issues, 3(3), 694–700. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/497

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Articles