The robustness of Okun's law: Evidence from OECD countries

Lee, Jim

doi:10.1016/s0164-0704(00)00135-x

Cited by 349 publications

(345 citation statements)

References 36 publications

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“…Quarterly data from 1947Q1-1992Q2 were used and the Okun's coefficient was found to be approximately -0.38. Lee (2000) conducted an analysis of 16 OECD countries. As a result of the analysis, it is concluded that there is cointegration between unemployment and growth variables.…”

Section: Literaturementioning

confidence: 99%

Economic growth and unemployment issue: Panel data analysis in Eastern European Countries

Soylu¹,

Çakmak²,

Okur³

2018

Journal of International Studies

105

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Abstract. The concepts of economic growth and unemployment are at the beginning of the most important variables in the sense that all economies are choosing and implementing economic policies. The purpose of this study to investigate the relation between economic growth and unemployment in Eastern European Countries for the period of 1992-2014 within panel data framework. In this paper this relationship has been examined in the context of Okun's Law. Panel Unit Root, Pooled Panel OLS and Panel Johansen Co-integration tests are applied respectively. The results show that the economic growth and unemployment series are stationary at first level, unemployment affected positively by economic growth, in other words 1% rise in GDP will fall the unemployment rate by 0.08% because of Okun's coefficient for Eastern European Countries and there is a co-integration between these important macroeconomic variables.

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Section: Literaturementioning

confidence: 99%

Economic growth and unemployment issue: Panel data analysis in Eastern European Countries

Soylu¹,

Çakmak²,

Okur³

2018

Journal of International Studies

105

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“…3 The investigation on this issue has been resumed after the postulated inverse unemployment-output relationship by Okun (1962). The robustness of the unemployment-output correlation has been evaluated by Lee (2000) using the postwar data for 16 OECD countries. The empirical findings provide evidence of asymmetric effects and structural breaks around 1970s, which support the instability of the relationship over time.…”

Section: Literaturementioning

confidence: 99%

“…However, when the fitness and stability of the Okun's law have been revisited and discussed by Sögner and Stiassny (2002); Perman and Tavera (2005), there is little evidence showing that the labour market should react to the business cycle in the symmetric pattern. In response to this issue, researchers are increasingly shifting their interests into the nonlinear modeling of the unemployment-output tradeoff (Lee, 2000;Harris and Silverstone, 2000;Altissimo and Violante, 2001;Vougas, 2003;Marinkov and Geldenhuys, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…In the existing regional unemployment-output relationship studies, the asymmetric effects have been found in the US (Silvapulle et al, 2004), New Zealand (Harris and Silverstone, 2000), South Africa (Marinkov and Geldenhuys, 2007) and OECD countries (Lee, 2000;Harris and Silverstone, 2001). There are some research focusing on the European countries (Perman and Tavera, 2005;Jardin and Stephan, 2010), but they did not test the long run and short run asymmetric effects in a nonlinear framework.…”

Section: Introductionmentioning

confidence: 99%

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Asymmetric unemployment-output tradeoff in the Eurozone

Tang

Bethencourt

2017

Journal of Policy Modeling

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This study investigates the asymmetric unemployment-output tradeoff in the Eurozone.Building upon the augmented Okun's law framework, the relationships between unemployment and output cannot be correctly specified in the static linear, static asymmetric and dynamic linear regressions. By contrast, the nonlinear autoregressive distributed lag (NARDL) model is well-specified and in this case indicates that the nature of Okun's law is asymmetric.For the Eurozone, the NARDL estimates demonstrate that labour markets quickly respond to cyclical outputs in a short period, while the adjustments towards new equilibrium become weak in the long run. Furthermore, the cross-sectional analysis of long run asymmetries indicates that government spending and trade balance are key factors affecting the asymmetric unemployment-output tradeoff. Thus, these results seem to suggest that, in spite of the fact that member states lack monetary sovereignty, flexible application of fiscal reforms or labour market reforms could help to reduce asymmetric effects. JEL Codes: C22, E32, J64.Keywords: unemployment-output tradeoff, nonlinear autoregressive distributed lag (NARDL), asymmetry determinants. * We thank Matthew Greenwood-Nimmo and Hanan Naser for their insightful comments on a previous version. The remaining errors are our own.

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“…Several features have recently been highlighted. Lee (2000) and Ball et al (2013) emphasize the importance to estimate country specific models because of institutional and other country specific effects that make one particular economy's experience after a shock seldom resemble the average across a group of countries. A case in point is the study by Pissarides (2013), which finds large unexplained variation in unemployment across OECD countries in a cross section of recession-time economic fluctuations.…”

Section: Introductionmentioning

confidence: 99%

Unemployment and Labor Reallocation in Europe

Hogrefe

Sachs

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Unemployment and labor reallocation in Europe * Jan Hogrefe * * ZEW MannheimAndreas Sachs * * * ZEW MannheimOctober 20, 2014 AbstractWe ask whether sectoral shocks and the subsequent labor reallocation are responsible for unemployment within selected European economies. Our measure of sectoral labor reallocation is adjusted for aggregate influences and the remaining variation is linked to unemployment in country specific dynamic models. For Spain, the ADL-model estimation reveals a significant impact of sectoral reallocation on unemployment that goes beyond usual business cycle patterns. In Italy, there is weaker yet detectable evidence for this mechanism. In Ireland, Portugal and France, no significant influence of sector level shocks on unemployment is found. The results emphasize the potential structural supply side policies have for reducing unemployment in Spain.JEL-Classification: E24, J62, J64

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The robustness of Okun's law: Evidence from OECD countries

Cited by 349 publications

References 36 publications

Economic growth and unemployment issue: Panel data analysis in Eastern European Countries

Economic growth and unemployment issue: Panel data analysis in Eastern European Countries

Asymmetric unemployment-output tradeoff in the Eurozone

Unemployment and Labor Reallocation in Europe

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