Spanish Regional Unemployment: Disentangling The Sources Of Hysteresis (springerbriefs In Economics)

This work investigates the time series properties of the unemployment rate of the Spanish regions over the period 1976-2011. For that purpose, the authors employ the PANIC procedures of Bai and Ng (2004), which allows to decompose the observed unemployment rate series into common factor and idiosyncratic components. This enables the authors to identify the exact source behind the hysteretic behaviour found in Spanish regional unemployment. Overall, the analysis with three different proxies for the excess of labour supply renders strong support for the hysteresis hypothesis, which appears to be caused by a common stochastic trend driving all the regional unemployment series. In the second part of the analysis the authors try to determine the macroeconomic and institutional factors that are able to explain the time series evolution of the common factor, and in turn help us shed light on the ultimate sources of hysteresis. The reader shall see how the variables that the empirical analysis emphasises as relevant closely fit into the main causes of the Spanish unemployment behaviour. Finally, some policy considerations drawn from the results are presented. Acknowledgments 5 Contents 6 Abstract 7 1 Introduction 8 Abstract 8 References 12 2 PANIC Analysis of Spanish Regional Unemployment 15 Abstract 15 2.1...Data 15 2.2...Econometric Methodology 16 2.3...Empirical Results 19 References 26 3 Explaining the Common Stochastic Trend in Spanish Regional Unemployment: Granger-Causality Analysis 28 Abstract 28 3.1...Data and Empirical Approach 28 3.2...Empirical Results 31 3.2.1 Real Production Variables 31 3.2.2 Open Economy, Fiscal and Monetary Variables 33 3.2.3 Labour Variables 35 3.2.4 Labour Cost Variables 37 3.2.5 Price Variables 38 3.2.6 Institutional Variables 40 References 45 4 Policy Considerations Drawn from Our Results 49 Abstract 49 References 52 5 Concluding Remarks 54 Abstract 54 Reference 55 Appendix Tables and Figures 56 References 70 Front Matter....Pages i-ix Introduction....Pages 1-7 PANIC Analysis of Spanish Regional Unemployment....Pages 9-21 Explaining the Common Stochastic Trend in Spanish Regional Unemployment: Granger-Causality Analysis....Pages 23-43 Policy Considerations Drawn from Our Results....Pages 45-49 Concluding Remarks....Pages 51-52 Back Matter....Pages 53-68