Revisiting Okun's Law: An Hysteretic Perspective

Yann Schorderet

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: Many developed countries have suffered from high unemployment rates during the last few decades. Beyond the economic and social consequences of this painful experience, the understanding of the mechanisms underlying unemployment still constitutes an important challenge. Focusing on one of its relevant determinants, we reexamine the link between output and unemployment. We show that the difficulty of detecting the close relationship between the two is due to a phenomenon of non-linearity. The asymmetric feature characterizing the data refers to a theory known as hysteresis.

Keywords: Hysteresis; unemployment; non-linearity; cointegration (search for similar items in EconPapers)
Date: 2001-08-01
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Citations: View citations in EconPapers (20)

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