Flexible Fourier unit root test of unemployment for PIIGS countries |
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| Affiliation: | 1. Department of Economics, Feng Chia University, Taichung, Taiwan;2. Department of Finance, Feng Chia University, Taichung, Taiwan;3. Department of Cooperative Economics, Feng Chia University, Taichung, Taiwan;1. Economics, Business School, University of Western Australia, Perth, Australia;2. TEI Stereas Elladas, University of Applied Sciences, Economics and Management of Tourist and Culture Units, Amfissa, Nea Poli, Greece;3. Open University of Cyprus, Latsia, Cyprus |
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| Abstract: | In this empirical study, we apply the flexible Fourier unit root test proposed by Enders and Lee (2012) to re-examine the hysteresis hypothesis of unemployment for PIIGS (Portugal, Ireland, Italy, Greece, and Spain) countries over the period from 1960 to 2011. We find that the Fourier unit root test has greater power than a linear method if the true data generating process of unemployment is a stationarity, non-linear process of an unknown form with structural change. The hysteresis in unemployment is confirmed for all PIIGS countries, with the exception of Portugal and Spain, when the Fourier unit root test is conducted. |
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