This presentation is part of: C10-1 Econometric and Statistical Studies

Multiple Equilibria in Spanish Unemployment

Javier Ordóñez, PhD, Economics, University Jaume I, Avda. Cardenal Tarancón, Burriana, 12530, Spain

The dynamics of Spanish unemployment in the last thirty years has

been characterized by a high and persistent unemployment period (from

1982 to 1999) and by two transition periods, one of massive employment

destruction (from 1972 to 1982) and one of massive employment

creation (from 1999 to 2007). This behavior is well captured by a nonlinear

smooth transition autoregressive (STAR) model and the analysis

in this paper indicates the existence of two regimes with a fast transition

between them: a high regime with an equilibrium value of unemployment

of 18.3% and a low regime with a equilibrium value of 7.6%.


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