Long-term economic stability at risk due to overlooked variable fluctuations.
The study developed new statistical tests to check if the estimated cointegrating vector remains stable over time. By applying these tests to real data, the researchers found that there is a stable, but changing, long-term relationship between domestic unemployment and certain economic variables. This variation in the relationship is mainly due to a one-time shift, rather than a gradual change, caused by the IMF financial and economic crisis.