Is Okun’s Law Valid in Romanian Economy? An Empirical Approach of Unemployment Rate and GDP Relation from 2000 to 2018

Lipară Daniel (), Gheorghiu Gabriela () and Barbu Corina Aurora ()
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Lipară Daniel: “Ovidius†University of Constanţa
Gheorghiu Gabriela: “Ovidius†University of Constanţa
Barbu Corina Aurora: “Ovidius†University of Constanţa

Ovidius University Annals, Economic Sciences Series, 2018, vol. XVIII, issue 2, 279-284

Abstract: Economic growth and the level of employment are two key factors that economists should consider when analyzing different economic aspects. In this article, we focus on the relation between the growth of unemployment rate and the growth of real gross domestic product (both expressed as a percentage) in the case of Romania. In our research we answer at the following questions? Is Okun’s rule valid in Romanian economy from 2000 to 2018? Does it hold over time? What is the relation between these variables? The empirical analysis showed the inverse relationship between them, confirming Okun’s findings, underlying that the rule is valid in the Romanian economy in the analyzed period, although the small value of R-squared made us interpret the results with caution, questioning somehow the sustainability of the law over time. Its validity can be seen more on short term analysis rather than on long term projections.

Keywords: unemployment rate; GDP; Okun’s law; economic growth (search for similar items in EconPapers)
JEL-codes: C22 E24 J64 O47 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xviii:y:2018:i:2:p:279-284

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