Abstract:

Unemployment is a major issue that concerns every part of society. The high unemployment rate can cause various problems through both supply and demand channels. Therefore, it is very important to analyze the characteristic characteristics of unemployment rate. In the theory of economics, unemployment hysteria and natural rate hypotheses are tested to determine whether the high unemployment rate is temporary or permanent. This study examines the validity of unemployment hysterics in 15 OECD countries for the 1991q1-2019q2 period using the Fourier panel stagnation test developed by Bahmani-Oskooee, Chang and Wu (2014) . The results of the emergency test do not support the validity of the unemployment hysteric hypothesis for the entire panel. However, in terms of country-specific results, unemployment hysteria is valid in Germany, Turkey and Spain. According to these findings, governments can effectively use macroeconomic policies to combat unemployment. In the remaining 12 OECD countries, the natural rate hypothesis applies. The impact of short-term shocks on the unemployment rate for these countries is temporary. Thus, the basic findings of the study show that the actual unemployment rates for the 15 OECD member countries will return to the natural unemployment rates in the long term.

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