External shocks, structural breaks and unemployment hysteresis in selected Asian countries

Qaiser Munir, and Ching, Kok Sook and Kasim Md Mansur, (2016) External shocks, structural breaks and unemployment hysteresis in selected Asian countries. Singapore Economic Review. ISSN 0217-5908

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Abstract

This paper re-examines the hypothesis of unemployment hysteresis using panel data for 11 Asian countries for the period from 1980 to 2008. This study employs a variety of panel data unit root tests recently advanced by Bai and Ng (2004), Pesaran (2007) and Chang and Song (2009). The advantage of these tests is that they are able to exploit the cross-section variations of the series. In addition to these tests, a new powerful panel stationarity test proposed by Carrión-i-Silvestre et al. (2005) is applied which exploits the cross-section variations of the series and also allows for different numbers of endogenous breakpoints in the series. Our findings stress the importance of accounting exogenous shocks in the series and provide stronger evidence against the hypothesis of unemployment hysteresis for the countries analyzed. We also discover critical economic affairs which may cause the unemployment rates to fluctuate significantly. Policy implications are proposed through our observations.

Item Type: Article
Uncontrolled Keywords: asian countries, cross-sectional dependence, Hysteresis, panel stationarity tests, structural breaks, unemployment rate
Subjects: H Social Sciences > HF Commerce
Divisions: FACULTY > Faculty of Business, Economics and Accounting
Depositing User: Unnamed user with email storage.bpmlib@ums.edu.my
Date Deposited: 12 Aug 2016 03:16
Last Modified: 23 Oct 2017 05:55
URI: http://eprints.ums.edu.my/id/eprint/13874

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