ASYMMETRY IN THE BUSINESS-CYCLE - EVIDENCE FROM THE AUSTRALIAN LABOR-MARKET

Cyclical asymmetry has been recognised as a non-linear phenomenon in r ecent studies examining unemployment rate time series. The probalistic structure of such time series is different during upswings and downsw ings and models should reflect this change in structure by incorporati ng non-linearities to allow for the switching in optimising behaviours between the different phases. In this paper we use a number of establ ished and new tests for identifying nonlinearities of different types as they occur in first-differenced time series of the seasonally-adjus ted monthly Australian aggregate and regional unemployment rates. Afte r identifying whether nonlinearity of a particular form is present in a given time series, the appropriate non-linear or linear model is fit ted and the model analysed for cyclical behaviour.