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Canadian Regional NAIRU Estimates: A Structural Break Approach

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  • Shannon, Mike
  • Moazzami, Bakhtiar

Abstract

This paper applies the Bai-Perron method to identify longer-run structural breaks in Canadian regional unemployment rate series in order to estimate natural rates of unemploy-ment for Canada and its regions. The longest samples (Canada, Quebec, Ontario, British Co-lumbia, the Maritimes, and the Prairie region) span the 1946-2011 period while the shortest samples, covering smaller provinces, are for 1966-2011. In all cases the technique reveals sig-nificant breaks. On the longer series a jump upward of 1.6%-3.2% is found in the mid-1950s. A second, and larger, increase occurs in the mid-1970s in all but the two western-most prov-inces and the Prairie region. Further increases are seen in the early 1980s in all provinces west of Ontario as well as in the Maritime region and Nova Scotia. Declines in natural rate esti-mates are found for several provinces and Canada as a whole in the mid-to-late 1990s.

Suggested Citation

  • Shannon, Mike & Moazzami, Bakhtiar, 2015. "Canadian Regional NAIRU Estimates: A Structural Break Approach," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 45(1).
    • Handle: RePEc:ags:jrapmc:243980
    DOI: 10.22004/ag.econ.243980
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    References listed on IDEAS

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