 Effect of Economic Growth on Unemployment and Validity of Okun’s Law in MauritiusUsha Devi Chuttoo Global Journal of Emerging Market Economies, 2020, vol. 12, issue 2, 231-250 Abstract: This study examines the relationship between unemployment and economic growth in Mauritius. The methodology adopted for this study is the autoregressive distributed lag (ARDL) bounds cointegration test, ARDL error-correction model (ARDL-ECM) using the ordinary least square (OLS) approach and Okun’s law-gap version. ARDL-ECM estimates the long-run and short-run relationship between economic growth and unemployment. The validity of Okun’s law is tested in the Mauritian context and Okun’s coefficient is thereby estimated. The results obtained from the tests show that both in the long run and short run, there is a negative cointegration between economic growth and unemployment, but it is not statistically significant. Whereas, the result of Okun’s law-gap version shows that Okun’s law is indeed valid in the small economy of Mauritius. From the Okun’s coefficient obtained, it is concluded that 4 percent change in gross domestic product (GDP) growth rate changes unemployment rate by 1 percent in the opposite direction in Mauritius. Keywords: Unemployment; economic growth; ARDL bound cointegration test; ARDL-error correction model; Okun’s law-gap version; Okun’s coefficient (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:sae:emeeco:v:12:y:2020:i:2:p:231-250 Access Statistics for this article More articles in Global Journal of Emerging Market Economies from Emerging Markets Forum |
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