 Empirical Analysis of the Phillips Curve and Okun’s Law Through Simultaneous Equation Modeling: A Case Study of PakistanMuhammad Umer, Mukhtar Danladi and Babar Nawaz Ekonomista, 2021, issue 3, 418-439 Abstract: According to the Phillips curve, there is an inverse relationship between inflation and unemployment. According to the Okun’s law, there is an inverse relationship between potential output growth and unemployment. The paper tries to check whether these interdependencies are seen in the Pakistan’s economy, thus testing the relevance of both dependencies for that economy. With this aim, the authors analyse the relationships between several macroeconomic variables, such as inflation rate, unemployment rate, GDP per capita growth rate, and population growth rate, using annual data of the period 1985–2017. By employing the respective simultaneous equation models (SEM) estimated with the indirect least square technique (ILS) and using various statistical tests, the authors conclude that the relationship postulated by the Phillips curve can be observed in the Pakistan’s economy, but the results of the examination do not confirm the occurrence of the relationship postulated by the Okun’s law. Keywords: Phillips curve; Okun’s law; simultaneous equations models; indirect least square technique; Pakistan (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:aoq:ekonom:y:2021:i:3:p:418-439 Access Statistics for this article More articles in Ekonomista from Polskie Towarzystwo Ekonomiczne Contact information at EDIRC. |
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