We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
The European unemployment problem: its cause and cure.
- Authors
Srinivasan, Naveen; Mitra, Pratik
- 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.
- Subjects
EUROPEAN Union; NATURAL rate of unemployment; HYSTERESIS (Economics); TIME-varying systems; ECONOMIC models; LABOR market
- Publication
Empirical Economics, 2014, Vol 47, Issue 1, p57
- ISSN
0377-7332
- Publication type
Article
- DOI
10.1007/s00181-013-0746-x