Unemployment hysteresis in Central and Eastern European countries during EU-membership

Kizilkaya, Oktay and Mike, Faruk and Kizilkaya, Fatma (2024) Unemployment hysteresis in Central and Eastern European countries during EU-membership. ACTA OECONOMICA, 74 (2). pp. 225-240. ISSN 0001-6373

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Abstract

This study aims to analyse the time series properties of the unemployment rates in 10 Central and Eastern European countries after joining the European Union. Three types of unit root tests were conducted: (1) linear unit root tests, namely ADF, PP, LM, and RALS-LM tests; (2) LM and RALS-LM unit root tests with two structural breaks; and (3) LM and RALS-LM unit root tests with Fourier function. The results reveal that the hysteresis hypothesis is valid for Bulgaria, Czechia, Hungary, Latvia, Lithuania, Romania and Slovenia, whereas the structuralist hypothesis is valid for Estonia and Poland. However, the natural rate hypothesis holds only for Slovakia.

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