Post-recession US employment through the lens of a non-linear Okun’s law
Menzie Chinn (),
Laurent Ferrara () and
No 2013-12, EconomiX Working Papers from University of Paris Nanterre, EconomiX
This paper aims at investigating the relationship between employment and GDP in the United States. We disentangle trend and cyclical employment components by estimating a non-linear Okun’s law based on a smooth transition error-correction model that simultaneously accounts for long-term relationships between growth and employment and short-run instability over the business cycle. Our findings based on out-of-sample conditional forecasts show that, since the exit of the 2008-09 recession, US employment is on average around 1% below the level implied by the long run output-employment relationship, meaning that about 1.2 million of the trend employment loss cannot be attributed to the identified cyclical factors.
Keywords: Okun’s law; trend employment; non-linear modeling (search for similar items in EconPapers)
JEL-codes: E24 E32 C22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-for, nep-lab and nep-mac
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Working Paper: Post-Recession US Employment through the Lens of a Non-Linear Okun's Law (2013)
Working Paper: Post-recession US Employment through the Lens of a Non-linear Okun's law (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2013-12
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