Are unemployment rates stationary in Asia-Pacific countries? New findings from Fourier ADF test

Figures & data

Table 1. Summary of statistics on unemployment (1980–2009).

	Mean	Minimum	Maximum	Standard deviation
Australia	7.29	4.20	10.90	1.84
China	3.10	1.80	4.90	0.78
Hong Kong	3.74	1.10	7.90	1.82
Japan	3.40	2.00	5.40	1.09
South Korea	3.56	2.00	7.00	1.15

Source: World Bank, 2012.

Figure 1. Time-path of unemployment (1980–2009).

Source: World Bank, 2012.

Table 2. Results of linear unit root tests.

	ADF	DF-GLS	PP	KPSS
Australia	−1.328(2)	−1.369(2)	−1.654[3]	0.353[4]*
China	−2.010(0)	−1.263(0)	−2.277[0]	0.378[4]*
Hong Kong	−1.591(3)	−1.635(3)	−1.470[1]	0.340[4]
Japan	0.466(5)	0.842(5)	−0.915[2]	0.563[4]**
South Korea	−3.087(1)**	−2.320(0)**	−2.589[5]	0.113[2]

Notes: The numbers in the parentheses indicate the optimal lag length suggested by the Akaike Information Criterion (AIC). The numbers in the brackets indicate the optimal bandwidth suggested by Newey-West bandwidth selection method (Newey and West, 1994).

Source: Author’s own calculation.

^** indicates significance at the 5% level;

^* indicates significance at the 10% level.

Table 3. Nonlinear FADF test results.

		SSR		AIC		τDF
Australia	1	2.901	6	1.637	13.180^***	−4.172^***
China	1	0.514	4	−0.266	4.528	−3.019
Hong Kong	1	8.206	3	2.223	9.885^**	−3.672^*
Japan	2	0.832	5	0.226	4.800	0.966
South Korea	2	15.566	1	2.607	2.552	−3.701^**

Notes:

The optimal lag () is the lag length that minimises the Akaike Information Criterion (AIC). The optimal frequency () was selected by using the data-driven grid-search method in which the frequency minimised the SSR from Equation 2.

Source: Author’s own calculation.

^*** indicates significance at the 1% level;

^** indicates significance at the 5% level;

^* indicates significance at the 10% level.

Table 4. Summary of findings.

	Lee et al. (2009)	Lee et al. (2010)	Furuoka (2012)	Current study
Research methods and data
Statistical test	Unit root test with structural breaks	Unit root test with structural breaks	Panel-based SURADF test	Nonlinear FADF test
Countries	Nine countries in East Asia	Nineteen OECD countries	Twelve countries in East Asia and Pacific	Five countries in Asia-Pacific region
Period	1960–2004	1976–2004	1980–2009	1980–2009
Empirical findings
Country
Australia	Stationary with structural breaks	Not included	Non-stationary	Stationary with structural breaks
China	Not included	Not included	Non-stationary	Non-stationary
Hong Kong	Not included	Non-stationary	Non-stationary	Stationary with structural breaks
Japan	Stationary with structural breaks	Non-stationary	Non-stationary	Non-stationary
South Korea	Stationary with structural breaks	Non-stationary	Stationary	Stationary

Source: Compiled by the author.

World Bank. (2012). World development indicators. Retrieved March 1, 2012, from http://data.worldbank.org/data-catalog/world-development-indicators

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