Quality & Quantity

, Volume 48, Issue 2, pp 681–695

Unemployment hysteresis in Australia: evidence using nonlinear and stationarity tests with breaks

Article

DOI: 10.1007/s11135-012-9795-z

Cite this article as:
Tiwari, A.K. Qual Quant (2014) 48: 681. doi:10.1007/s11135-012-9795-z
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Abstract

This study is an attempt to test the hysteresis versus the natural rate hypothesis in unemployment rate using time series data of the Australia covering the period 1978: 2–2010:12. For the analysis, we employed nonlinear as well as different linear tests (with incorporation of endogenously determined structural breaks) of unit root. We found that the Australian unemployment rate is nonlinear process, has a partial unit root and trend reverting. Therefore, we provide support for the structuralist hypothesis. This finding provides the importance of accounting for exogenous shocks in the series and gives support to the shifting natural-rate hypothesis of the Australian unemployment rate.

Keywords

Unemployment rate Hysteresis Threshold autoregressive model Nonlinear unit root Structural breaks 

Copyright information

© Springer Science+Business Media Dordrecht 2012

Authors and Affiliations

  1. 1.Faculty of ManagementICFAI University, TripuraKamalghat, SadarIndia

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