A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

Kavese Kambale () and Andrew Phiri
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Kavese Kambale: Eastern Cape Socio-Economic Consultation Council, East London, South Africa, 5217

Studia Universitatis „Vasile Goldis” Arad – Economics Series, 2020, vol. 30, issue 3, 59-76

Abstract: A provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive distributive lag (N-ARDL) model whilst the Corbae-Ouliaris filter is used to extract the ‘gap’ variables required for our regression estimates. Okun’s law is found to be significant hold in the long-run exclusively for the Western Cape and Kwa-Zulu Natal provinces whereas the remaining provinces partially display significant short-run effects. Our sensitivity analysis in which panel N-ARDL estimations for all provinces finds insignificant long-run Okun effects for the country as a whole, whilst validating the relationship only in the short-run. Our study hence advises that the epicenter of policy efforts in addressing the country’s high unemployment and low economic growth dilemma should be concentrated at a provincial level.

Keywords: Economic growth; unemployment; Okun’s law; Provincial analysis; nonlinear ARDL model; Corbae-Ouliaris filter; South Africa; Emerging economies (search for similar items in EconPapers)
JEL-codes: C13 C32 C51 E24 O40 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: A provincial perspective of nonlinear Okun's law for emerging markets: The case of South Africa (2018)
Working Paper: A provincial perspective of nonlinear Okun's law for emerging markets: The case of South Africa (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:suvges:v:30:y:2020:i:3:p:59-76:n:3

DOI: 10.2478/sues-2020-0017

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