Okun’s law: evidence of 13 selected developed countries

Matiur Rahman () and Muhammad Mustafa ()
Additional contact information
Matiur Rahman: McNeese State University
Muhammad Mustafa: South Carolina State University

Journal of Economics and Finance, 2017, vol. 41, issue 2, No 5, 297-310

Abstract: Abstract This paper re-examines the validity of Okun’s Law for 13 selected developed countries over 1970–2013. λ maxand λ trace tests reveal cointegrating relationship between unemployment rate and real GDP growth in all countries except Germany. However, dynamic OLS estimates portray a somewhat different picture. The estimates of bivariate error-correction model (ECM) unveil that Okun’s Law is quite valid only for the USA and South Korea. At the same time, evidence is relatively weaker for Canada, Finland, France, Japan, Italy, The Netherlands, New Zealand, Sweden, UK and Australia. However, it is invalid for Germany.

Keywords: Okun’s law; Real GDP growth; Unemployment rate; Cointegration; Vecm (search for similar items in EconPapers)
JEL-codes: E60 E61 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s12197-015-9351-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9351-5

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-015-9351-5

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().