The paper challenges the common practice of estimating Okun's law at a regional level and investigates the mathematical and statistical model valid for regional applications. Confining to the difference version of Okun's law, the paper demonstrates that if a trade‐off between output fluctuations and fluctuations in the labour market is to hold on an economy‐wide level, a completely different specification of Okunian equations ensues for regions than is currently considered in research studies on the topic. An econometric approach is proposed to provide estimates of Okunian equations compliant with the disaggregation model, and the issue is demonstrated for Italian regions.
Príspevok vznikol v rámci plnenia záväzkov projektu Operačného programu Vzdelávanie ITMS 26110230082 Mobility-podpora vedy, výskumu a vzdelávania na UMB kofi nancovaného Európskym sociálnym fondom (č. 018/2012/1.2/OPV).
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