Hysteresis in Unemployment: The Case of the Czech Republic
| Authors | |
|---|---|
| Year of publication | 2005 |
| Type | Article in Proceedings |
| Conference | IMEA 2005 - conference proceedings |
| MU Faculty or unit | |
| Citation | |
| Field | Economy |
| Keywords | hysteresis; unemployment; natural rate of unemployment; NAIRU |
| Description | This contribution attemps to identify empirically hysteresis of unemployment in the Czech Republic. There does not exist a consensus about the definition of 'hysteresis' and many authors confuse 'hysteresis' with 'persistence'. They have similar symptoms in the labour market (high and persistent unemployment), but there are many differences between these notions, which arise from theoretical background behind them. Hysteresis is a natural property of the system. Persistence signifies structural imperfections in the system. The existence of hysteresis has therefore important implications for economic policy and its tools, because they can be efficient in the battle against unemployment in long-run. We understand the notion of hysteresis from Robert J. Gordon's general macroeconomics point of view of New Keynesian Macroeconomics, i.e. the natural rate of unemployment (often called NAIRU) follows in the path of the actual unemployment rate. Hysteresis is confirmed in a simple model for macroeconomic data for the Czech Republic. |
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