AN EXAMINATION OF OKUN'(tm)S LAW: EVIDENCE FROM EUROPEAN TARGET COUNTRIES

Mattoscio Nicola (), Bucciarelli Edgardo (), Odoardi Iacopo and Persico Tony Ernesto ()
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Mattoscio Nicola: University of Chieti-Pescara, Italy, Department of Quantitative Methods and Economic Theory
Bucciarelli Edgardo: University of Chieti-Pescara, Italy, Department of Quantitative Methods and Economic Theory
Odoardi Iacopo: University of Chieti-Pescara, Italy, School of Advanced Studies, Doctorate of Philosophy, XXIV cycle
Persico Tony Ernesto: University of Chieti-Pescara, Italy, School of Advanced Studies, Doctorate of Philosophy, XXVII cycle

Annals of Faculty of Economics, 2012, vol. 1, issue 2, 237-243

Abstract: In this paper Okun'(tm)s law is tested for six European selected countries in order to compare the responsiveness of unemployment to economic growth over the period 1981-2010. In the first section there is a survey of scientific works that have observed the empirical relationship between growth and unemployment. The countries selected are representative of different socio-economic contexts today existing in Europe, i.e. EU member countries, countries that adopt the Euro, and others which are candidates to join the EU or that although EU members have chosen not to adopt the Euro. Finally, we also refer to the U.S. and Canada, which are country-systems where the regularity of Okun'(tm)s rule of thumb was conceived. In particular, we intend to represent the data of the macroeconomic variables GDP and unemployment rate in their annual variations for a time series sufficiently long to show the occurrence of the supposed regularity, and then to investigate specific cases, which represent changes compared to the expected variations. In addition to any changes occurred over time in the studied relationship, these empirical observations, along with the reported literature, will help to draw conclusions about the differences regarding the inflexibility and responsiveness to changes in the aggregated output by the labor market of the countries involved in the study.

Keywords: economic growth; unemployment; European countries; estimation models (search for similar items in EconPapers)
JEL-codes: B22 C13 E24 (search for similar items in EconPapers)
Date: 2012
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