IS NATURAL RATE OF UNEMPLOYMENT OR UNEMPLOYMENT HYSTERESIS? AN ANALYSIS FOR DIFFERENT VARIETIES OF CAPITALISM

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The purpose of this paper is to investigate empirically whether unemployment behavior is explained by the natural rate of unemployment hypotheses or unemployment hysteresis hypothesis in the liberal market economies and coordinated market economies that are described as two ideal types of capitalism in the literature. For this purpose, quarterly unemployment rates are used for the period 1993-2017. First, it is applied the panel unit root tests which take into account cross-sectional dependence. Then, the unemployment hysteresis hypothesis is individually tested for the two groups of countries by using linear unit root tests, which allow for possible structural breaks. The empirical findings suggest that for the coordinated market economies hysteresis hypothesis and for the liberal market economies the natural rate hypotheses are more reasonable hypothesis.

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Unemployment Hysteresis , Natural Rate of Unemployment , Varieties of Capitalism

Abant Sosyal Bilimler Dergisi

298

Abant Sosyal Bilimler Dergisi