 The PIGS, does the Group Exist? An empirical macroeconomic analysis based on the Okun LawNo 2009-11, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra Abstract: Will the current crisis accelerate the PIGS collapse? We approach the subject by comparing the responses of the unemployment rate to an output shock on those economies (Portugal, Italy, Greece and Spain) with those of a benchmark economy – the USA. Our methodological strategy relies on one of the pillars of empirical macroeconomics the Okun Law (OL) which we incorporated in a VAR model. We addressed two drawbacks usually present in OL, the interdependency problem and the non-stationarity problem. We have included in our models the participation rate as a way to overcome the former problem and for the later one we have analysed the time series properties of the variables used on our models. We propose stable VAR models for each of the economies involved and also a fixed-effects panel-VAR for the PIGS. The time for the absorption of shocks and the disequilibrium levels are much more favourable to USA, but we conclude also that in terms of unemployment we are not allowed to consider the PIGS as a homogenous group. Keywords: Okun Law; C-I; VAR; Participation rate; Stability and Impulses. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:gmf:wpaper:2009-11 Access Statistics for this paper More papers in GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra Contact information at EDIRC. |
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