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Is Abrams curve a myth or reality? Evidence from two Baltic countries

Author

Listed:
  • İbrahim Özmen

    (Selcuk University)

  • Selçuk Bali

    (Selcuk University)

  • Festus Victor Bekun

    (Istanbul Gelişim University
    American University)

Abstract

Government expenditures may tend to defray to increasing social needs with economic growth and development. This study focused on the effects of government expenditure on unemployment and conducted empirical research on the possible positive or negative effects of government expenditure on unemployment. This study employed the asymmetric causality and Kernel-based Regulated least squares (KRLS) method with machine learning to examine the effect of government expenditure on the unemployment rate for two Baltic countries (Estonia and Latvia) for annual time frequency data from 1995 to 2019. Asymmetric causality findings show that increase government final government consumption has a decreasing impact on unemployment in the Estonia. In addition to this, no enough evidence for Abrams Curve from Estonia and Latvia. Additionally, the government’s final consumption and expenditure effects have different signs at different quantiles. KRLS quantile coefficient findings point out that V-shape and inverse V-shape curve instead of the Abrams Curve for our sample.

Suggested Citation

  • İbrahim Özmen & Selçuk Bali & Festus Victor Bekun, 2024. "Is Abrams curve a myth or reality? Evidence from two Baltic countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 58(3), pages 2709-2733, June.
    • Handle: RePEc:spr:qualqt:v:58:y:2024:i:3:d:10.1007_s11135-023-01778-6
    DOI: 10.1007/s11135-023-01778-6
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    More about this item

    Keywords

    Government expenditure; Unemployment; Asymmetric causality; Non-linearity;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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