No. 90. SOME FURTHER EVIDENCE UPON TESTING HYSTERESIS IN THE GREEK PHILLIPS-TYPE AGGREGATE WAGE EQUATION
Y. Panagopoulos. 2007.
The aim of this paper is to test the significance of the hysteresis effect in an typical aggregated Phillips-type wage equation (curve). More specifically, using alternatively the theoretical specifications of Setterfield (1993) and Blanchard and Summers (1986), concerning the hyteresis/insider-outsider variable, we will try to test its effect upon the Greek Phillips wage curve for a prolonged period of time (1960-2007e). Our method of estimation will be twofold: the simple OLS process and the Johansen cointegration-based error-correction procedures (ECM-GE). The results favour the unemployment persistence hypothesis, in the simple OLS case, and the hysteresis effect in the ECM-GE approach.