Prague Economic Papers 2019, 28(5):532-546 | DOI: 10.18267/j.pep.709

Unemployment Hysteresis in the Czech Republic

Jakub Bechný
Masaryk University, Faculty of Economics and Administration, Brno

This paper analyses the unemployment hysteresis in the Czech Republic on data from 1999 to 2016. The hysteresis is modelled by allowing for the impact of cyclical unemployment on the non-accelerating inflation rate of unemployment. Models are estimated using the Bayesian approach and provide robust evidence in favour of the hysteresis. The estimates imply that in response to an increase in the cyclical unemployment of 1 percentage point, the non-accelerating inflation rate of unemployment increases by 0.18 percentage points.

Keywords: hysteresis, NAIRU, Phillips curve, state-space models, unemployment
JEL classification: C11, C32, E24, E32

Received: October 10, 2017; Accepted: September 21, 2018; Prepublished online: September 24, 2019; Published: November 1, 2019  Show citation

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Bechný, J. (2019). Unemployment Hysteresis in the Czech Republic. Prague Economic Papers, 28(5), 532-546. doi: 10.18267/j.pep.709
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