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Are unemployment rates stationary for SEE10 countries? Evidence from linear and nonlinear dynamics

Author

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  • Saša Obradoviæ

    (University of Kragujevac – Faculty of Economics, Djure Pucara 3, 34000 Kragujevac, Serbia. Street, 300115 Timisoara, Romania.)

  • Lela Ristiæ

    (University of Kragujevac – Faculty of Economics, Djure Pucara 3, 34000 Kragujevac, Serbia.)

  • Nemanja Lojanica

    (University of Kragujevac – Faculty of Economics, Djure Pucara 3, 34000 Kragujevac, Serbia.)

Abstract

This article aims to answer the questions concerning the dynamics of unemployment rates, including whether there is a subsequent hysteresis in the selected sample of ten countries of the South East Europe. The linear and nonlinear tests have been used to determine the stationarity of unemployment rates. The findings show that in eight out of ten countries, unemployment is a stationary process which implies that the hysteresis hypothesis has not been confirmed. The unemployment rates in Albania, Bulgaria, Slovenia, Croatia, Romania, Greece, Montenegro and Turkey manifest mean reverting behaviour. The movements of unemployment rates in the next period can be forecasted with a relatively high degree of certainty in terms of the mentioned countries. The unemployment in FYR Macedonia and Serbia is a non-stationary process. The results further emphasize the importance of allowing asymmetric adjustment and structural breaks, especially in the case of Romania, Montenegro and Turkey.

Suggested Citation

  • Saša Obradoviæ & Lela Ristiæ & Nemanja Lojanica, 2018. "Are unemployment rates stationary for SEE10 countries? Evidence from linear and nonlinear dynamics," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 559-583.
    • Handle: RePEc:rfe:zbefri:v:36:y:2018:i:2:p:559-583
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    More about this item

    Keywords

    hysteresis; unemployment rate; non-linearity; stationarity and unit root;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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