Hysteresis and change of persistence in unemployment rates, international evidence

Abstract

The goal of the objective is give an empirical answer to the problem that is facing the Economic Theory in the last decades and nowadays it is a concerning issue in many European countries. It has been observed how the last recessions and important shocks have generating a necessary debate in questioning the natural rate theories. As a result, the answer we try to give is related with the hysteresis theories which argue that the actual unemployment depends on the past unemployment. The evidence will be searched through the use of unit root tests.