ENDOGENOUS SHOCKS IN CROATIAN UNEMPLOYMENT

Using the quantile regression approach this paper explores the nature of endogenous shocks in unemployment of Croatia during the period 2000Q1-2018Q4. Standard unit root tests give inconclusive results. Recent literature highlights the bias of unit root tests toward the null hypothesis. Considering the nonlinear nature of time series which may influence the standard unit root tests this paper uses a quantile auto-regression approach. Results confirm unemployment hysteresis in Croatia. Furthermore, there is an asymmetric behavior of endogenous shocks. Outcomes have important implications for policy, growth and development of the Croatian economy.