A Simple Nonlinear Dynamic Model for Unemployment: Explaining the Spanish Case

Table 1

Markov-switching model for Spain’s unemployment.

	Regime means
	Mean	St. error
Regime 1	2.216	0.316
Regime 2	10.77	0.407
Regime 3	19.52	0.294
	Transition probabilities
	Regime 1	Regime 2	Regime 3
Regime 1	0.9815	0.01853	1.27E-28
Regime 2	3.09E-12	0.978	0.022
Regime 3	2.61E-15	0.0142	0.9858
	Regime duration
	% Observ.	Duration
Regime 1	53	53.96
Regime 2	46.5	45.45
Regime 3	70.5	70.42
	Regime dating
Regime 1	1965:1–1978:1
Regime 2	1978:2–1981:4
	1999:4–2007:2
Regime 3	1982:1–1999:3
	AIC
𝑀=1 (linear)	6.92
𝑀=2	5.57
𝑀=3	4.65