Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do?

Andrew Phiri

Economics Bulletin, 2019, vol. 39, issue 2, 1371-1383

Abstract: Despite Okun's law being hailed one of the most fundamental pieces within macroeconomic policy paradigm, empirical evidence existing for the Kingdom of Swaziland remains virtually non-existent. Our study fills this void/hiatus in the literature by examining Okun's law for the Swazi Kingdom by using the nonlinear autoregressive distributive lag (N-ARDL) model applied to data collected over 1991 to 2017. To ensure robustness of our empirical analysis, we further apply the Corbae-Oularis (C-O) filter to extract the gap variables required for empirical estimates. Remarkably, we find strong evidence for nonlinear Okun's trade-off between unemployment and output growth in Swaziland with this trade-off being stronger during recessionary periods compared to expansionary periods. Much-needed policy enlightenment is drawn for Swazi authorities from our findings.

Keywords: Okun's law; Nonlinear autoregressive distributive lag (N-ARDL) model; Swaziland; Sub-Saharan African (SSA) country; Corbae-Oularis filter. (search for similar items in EconPapers)
JEL-codes: E3 O4 (search for similar items in EconPapers)
Date: 2019-05-31
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http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I2-P130.pdf (application/pdf)

Related works:
Working Paper: Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do? (2018)
Working Paper: Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do? (2018)
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