Regional tests of Okun's law

Donald Freeman ()

International Advances in Economic Research, 2000, vol. 6, issue 3, 557-570

Abstract: "Okun's law" describes an enduring empirical observation first made by Arthur Okun, relating departures from the natural rate of unemployment to changes in real output. This paper employs a recent development in trend-cycle decomposition of economic time series to measure the Okun coefficient using U.S. national and regional data. The key finding of this paper is that the value of the coefficient measuring the change in real output per unit of change in the unemployment rate, both measured as departures from equilibrium, is stable at a value of about 2 for all time periods and across regions of the U.S., irrespective of the method used to measure equilibrium output and employment. Copyright International Atlantic Economic Society 2000

Date: 2000
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DOI: 10.1007/BF02294972

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