Revisiting unemployment hysteresis in G7 countries: Evidence from the Fourier Nonlinear Quantile Unit Root approach

Authors : Nedim Mercan

Pages : 141-147

Doi:10.18070/erciyesiibd.1762575

View : 74 | Download : 77

Publication Date : 2025-12-31

Article Type : Research Paper

Abstract :Unemployment is a socio-economic issue, and as such, it remains a dynamic concern for economic policy authorities across all periods. The structural and cyclical aspect of unemployment determines the implementation direction of policies. This study seeks to reassess the unemployment hysteresis hypothesis in G7 countries from an asymmetric viewpoint and to present novel empirical findings. Both conventional and quantile unit root tests are utilized in the analysis. The primary focus of the study is the Fourier Nonlinear Quantile Unit Root (FNQUR) test, which simultaneously captures non-normal (heavy-tailed) distributions, nonlinearity, structural breaks, and asymmetric adjustments. Based on the findings of the Fourier ADF (FADF) test, two countries exhibit stationary processes, while the Fourier KSS (FKSS) test confirms stationarity for only one country. Similarly, the Fourier QKS (FQKS) test supports stationarity in two countries. However, the results of the FNQKS test, our main focus, differ significantly. Based on the results of the FNQKS test, Canada, Germany, Japan, the UK, and the US exhibit a unit root stationary process. These findings point to the validity of the Natural Rate Hypothesis (NRH). Accordingly, while conventional tests generally support the Unemployment Hysteresis Hypothesis (UH), the FNQKS test, contrarily points toward the NRH. An examination of the quantile-based results reveals that the impacts of positive and negative shocks diverge. In this context, the quantile results provide evidence for the presence of an asymmetric structure in Canada, Germany, Japan, the UK, and the US. This provides new evidence on unemployment hysteresis in the framework of G7 economies.
Keywords : işsizlik histerisi, G7 ülkeleri, kantil birim kök testi

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