Sectoral Okun’s Law and Cross-Country Cyclical Differences

Eiji Goto and Constantin Bürgi

No 2019-002, Working Papers from The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting

Abstract: We estimate Okun's law at the sectoral level for the US, the UK, Japan, and Switzerland to test several hypotheses that may explain why the aggregate Okun's coefficients are different across countries. Specifically, we show that the sectoral composition is not a driver and find that the sectoral coefficients are proportional to the aggregate in all four countries. We also show that the standard deviation of unemployment is the main driver of the cross-country differences. This is consistent with labor market policies being crucial to explain the cross-country cyclical differences in the aggregate Okun's coefficient.

Keywords: Okun's law; Cross-country differences; Sectors (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2019-07
New Economics Papers: this item is included in nep-lab and nep-mac
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Citations: View citations in EconPapers (2)

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https://www2.gwu.edu/~forcpgm/2019-002.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Sectoral Okun's law and cross-country cyclical differences (2021)
Working Paper: Sectoral Okun's Law and Cross-Country Cyclical Differences (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:gwc:wpaper:2019-002

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