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Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do?

Andrew Phiri ()

No 1829, Working Papers from Department of Economics, Nelson Mandela University

Abstract: Despite Okun’s law being hailed one of the most fundamental pieces within macroeconomic policy paradigm, empirical evidence existing for the Kingdom of Swaziland remains virtually non-existent. Our study fills this void/hiatus in the literature by examining Okun’s law for the Swazi Kingdom by using the nonlinear autoregressive distributive lag (N-ARDL) model applied to data collected over 1991 to 2017. To ensure robustness of our empirical analysis, we further apply the Corbae-Oularis (C-O) filter to extract the gap variables required for empirical estimates. Remarkably, we find strong evidence for nonlinear Okun’s trade-off between unemployment and output growth in Swaziland with this trade-off being stronger during recessionary periods compared to expansionary periods. Much-needed policy enlightenment is drawn for Swazi authorities from our findings.

Keywords: Okun’s law; Nonlinear autoregressive distributive lag (N-ARDL) model; Swaziland; Sub-Saharan African (SSA) country; Corbae-Oularis filter. (search for similar items in EconPapers)
JEL-codes: C22 C32 E24 O40 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2018-08
New Economics Papers: this item is included in nep-ets and nep-mac
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http://repec.mandela.ac.za/RePEc/mnd/wpaper/paper.1829.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do? (2019) Downloads
Working Paper: Fitting Okun's law for the Swazi Kingdom: Will a nonlinear specification do? (2018) Downloads
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