EconPapers    
Economics at your fingertips  
 

On the estimation of Okun’s coefficient in some countries in Latin America: a comparison between OLS and GME estimators

Luca Zanin ()
Additional contact information
Luca Zanin: Prometeia

Empirical Economics, 2021, vol. 60, issue 3, No 19, 1575-1592

Abstract: Abstract We explore Okun’s coefficient in several Latin American countries for the period from 1995 to 2017 and compare the results obtained using ordinary least squares (OLS) and generalised maximum entropy (GME) estimators. There are several advantages in considering the GME estimator over traditional regression approaches. First, it can estimate the parameters of an equation without imposing constraints on the probability distribution of the errors. Second, empirical and simulation studies available in the literature showed that GME worked well for ill-posed problems (e.g. when a model estimate is performed using a small sample of data). Among the main findings, we confirm the inverted relationship between changes in the unemployment rate and real gross domestic product growth in the explored countries except for Perù. Okun’s coefficient and the associated confidence intervals obtained by applying GME were very close to those obtained from OLS. Therefore, we did not observe a gain when using the GME estimator rather than the classic OLS approach.

Keywords: Generalised maximum entropy; Gross domestic product; Latin America countries; Ordinary least squares; Okun’s coefficient; Unemployment rate (search for similar items in EconPapers)
JEL-codes: C50 E24 N16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s00181-019-01798-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:60:y:2021:i:3:d:10.1007_s00181-019-01798-y

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-019-01798-y

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-12
Handle: RePEc:spr:empeco:v:60:y:2021:i:3:d:10.1007_s00181-019-01798-y