 Okun's law in panels of countries and statesHo-Chuan Huang () and Chih-Chuan Yeh Applied Economics, 2013, vol. 45, issue 2, 191-199 Abstract: This article contributes to the empirical literature of Okun's law in three respects. First, in contrast to the limited data used in the existing studies, we employ two extensive (across countries and across states, i.e. within a country) panel data sets to investigate the validity of Okun's law. Second, the use of the Pooled Mean Group (PMG) estimator permits us not to pre-filter the data as often done in the current literature, and can take into account the possibility of cointegration between unemployment and output. Third, in addition to the short-run relationship or cyclical components between unemployment and output, we also estimate the long-run linkage between these two important variables. Empirical results show that unemployment and output are long-run cointegrated, irrespective of using country- or state-level data. Moreover, the unemployment-output linkages are found to be negative and highly significant both in the short- and long-run. Our results not only confirm the validity of Okun's law (in the short-run) but also point out that a similar tradeoff exists in the long run. Date: 2013 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:45:y:2013:i:2:p:191-199 Ordering information: This journal article can be ordered from DOI: 10.1080/00036846.2011.597725 Access Statistics for this article Applied Economics is currently edited by Anita Phillips More articles in Applied Economics from Taylor & Francis Journals |
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