Okun's law - a meta analysis

Roger Perman, Stephan Gaetan and Christophe Tavera ()
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Stephan Gaetan: CREM

No 1311, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.

Keywords: Okuns law; meta analysis; Okun's law coefficient; OLC (search for similar items in EconPapers)
JEL-codes: E3 E31 E32 E6 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2013-07
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Okun's Law—a Meta-analysis (2015)
Working Paper: Okun's Law - a Meta-analysis (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:1311

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