TITLE

The European unemployment problem: its cause and cure

AUTHOR(S)
Srinivasan, Naveen; Mitra, Pratik
PUB. DATE
August 2014
SOURCE
Empirical Economics;Aug2014, Vol. 47 Issue 1, p57
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The stubbornly high unemployment experienced by European countries since the mid-1970s have led to a major reconsideration of the natural rate paradigm. Traditional theories which describe movements of unemployment as fluctuations around a moving natural rate have been challenged by hysteresis theories. The question arises how one can discriminate between these competing theories. To this end, we estimate a time-varying parameter model of the unemployment rate for the US, UK, Germany, and France. The parameters of the model were estimated jointly by maximum likelihood estimation using the Kalman filter algorithm. When the moving natural rate model is tested against the alternative of a unit root process, the unit root hypothesis is resoundingly rejected. Among the determinants of the natural rate institutions that alter labour market incentives for workers appear to have been more important than institutions that affect labour demand.
ACCESSION #
96857935

 

Related Articles

  • Time-Varying NAIRU and Some of Its Determinants—A Semi-Structural Approach: Evidence from Eastern European Economies. Pošta, Vít // Eastern European Economics;2015, Vol. 53 Issue 2, p149 

    The results of structural estimates of the hybrid New Keynesian Phillips curve are used to calibrate a semistructural state-space model that is then used to estimate a time-varying NAIRU. In the first version, the NAIRU is estimated as a simple autoregressive process. In the second, the state...

  • The nature of regional unemployment in Italy. Lanzafame, Matteo // Empirical Economics;Dec2010, Vol. 39 Issue 3, p877 

    Taking as a starting point the evidence of growing disparities for most of the 1984-2007 period, this article investigates the nature of regional unemployment in Italy. In particular, we assess whether the Italian regional unemployment rates contain a unit root and are, thus, subject to pure...

  • TÃœRKÄ°YE'DE Ä°ÅžSÄ°ZLÄ°K HÄ°STERÄ°SÄ° VE STAR MODELLERÄ° UYGULAMASI. KoçyıÖğt, Ali; Bayat, Tayfur; Tüfekçı, Ali // Marmara University Journal of the Faculty of Economic & Administ;Dec2011, Vol. 31 Issue 2, p45 

    In this research, it's been studied whether economic shocks affect natural unemployment rate biases in Turkey by analyzing unemployment rates between the years of 1923-2010. Stationarity of series is tested by using Augmented Dickey-Fuller test developed by Dickey and Fuller (1981). It has been...

  • DoÄŸal Ä°ÅŸsizlik Oranı mı? Ä°ÅŸsizlik Histerisi mi? Türkiye İçin Sektörel Panel Birim Kök Sinaması Analizi. GÜLOĞU, Bülent; İSPİR, M. Serdar // Ege Academic Review;2011, Vol. 11 Issue 2, p205 

    In this study we investigate whether sector-specific unemployment in Turkey is explained by natural rate of unemployment or hysteresis hypothesis. We employ sectoral unemployment rate in nine Turkish leading sectors covering the period 1988-2008 and test the stationarity of unemployment rates....

  • Two Orthogonal Continents? Testing a Two-country DSGE Model of the US and the EU Using Indirect Inference. Vo Phuoung Mai Le; Meenagh, David; Minford, Patrick; Wickens, Michael // Open Economies Review;Feb2010, Vol. 21 Issue 1, p23 

    We examine a two country model of the EU and the US. Each has a small sector of the labour and product markets in which there is wage/price rigidity, but otherwise enjoys flexible wages and prices with a one quarter information lag. Using a VAR to represent the data, we find the model as a whole...

  • A DISEQUILIBRIUM ANALYSIS OF THE LABOUR MARKET: REVIEW AND COMMENTS. Meulendijks, Pieter J. F. G. // De Economist (0013-063X);Dec1979, Vol. 127 Issue 4, p570 

    The article has been divided into two main parts. The first consists of a review and an evaluation of Lenderink and Siebrand's analytical and empirical approaches to the short-run phenomena on the Dutch labour market during the period 1952-1970. The main implications are explicitly stated and...

  • Increasing Employment Participation in Australia and How to Finance It. Keating, Michael // Australian Bulletin of Labour;2006, Vol. 32 Issue 2, p163 

    This paper considers the optimal combination of policies that maximise the opportunities for paid employment while also being acceptable in terms of the income distribution effects. While the official unemployment rate has remained relatively low over recent years, the growth in full time...

  • A Bayesian stochastic frontier: an application to agricultural productivity growth in European countries. Tonini, A. // Economic Change & Restructuring;Nov2012, Vol. 45 Issue 4, p247 

    This paper measures and compares total factor productivity (TFP) growth in agriculture for the European Union (EU) countries and candidate countries (CC), in order to distinguish and investigate cross-country differences in agricultural productivity growth rates from 1993 to 2006. A stochastic...

  • Regime dependent dynamics and European stock markets: Is asset allocation really possible? Ahmad, Wasim; Bhanumurthy, N.; Sehgal, Sanjay // Empirica;Feb2015, Vol. 42 Issue 1, p77 

    In this study, we examine the regime shifts and volatility in stock market returns of eighteen European stock markets and the USA and utilize these regimes in asset allocation and risk management contexts. Using a Markov regime switching model, the study finds strong evidence of regime switching...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics