Hysteresis effects in the euro area

This thesis uses the approach proposed by Lepetit et al. (2023) to identify demand shocks that are allowed to have permanent effects on output through hysteresis effects in euro area countries. These shocks are estimated using vector autoregressive models and their impact is identified using zero long and sign restrictions following the approach and the algorithms proposed by Arias, Rubio-Ramirez and Waggoner (2018). The main focus is on unemployment as the main channel for hysteresis effects as advocated by Ball and Onken (2021) and in the paper by Lepetit et al. (2023).