Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75522
Authors: 
Reutter, Michael
Year of Publication: 
2000
Series/Report no.: 
CESifo Working Paper 240
Abstract: 
The view that high unemployment in West Germany and other European countries is caused by a path dependence effect - or hysteresis effect - is quite popular among economists. However, because of an identification problem, much of the empirical evidence for this hypothesis is not fu lly convincing. This paper suggests a testing procedure that overcomes this problem. It is argued that in a cointegration framework it is reasonable to define hysteresis as the absence of weak exogeneity of the explanatory variables. Building on a cointeg ration model of the employment rate in West Germany, I find only weak evidence for hysteresis.
Subjects: 
Cointegration
hysteresis
trade unions
unemployment
Document Type: 
Working Paper

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