Abstract
The purpose of this paper is to analyze the unemployment hysteresis hypothesis in South Africa over the period 2000 to 2023. The study employed the wavelet unit root process, namely the Discrete Wavelet Transform (DWT) and the Maximum Overlap Wavelet Transform (MODWT) unit root processes. Furthermore, the linear tests comprised of the Augmented Dickey-Fuller (ADF), the Phillips-Perron (PP), and Kwiatkowski-Phillips-Schmidt-Shin (KPSS) tests were used, while the Fourier ADF tests were used as the non-linear end. Consequently, all the linear tests reveal some mean reversion while the Fourier ADF test confirms partial hysteresis: shocks to unemployment are indeed not permanent, but their effects do last over time.
Published Version
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