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AN EXAMINATION OF OKUN'(tm)S LAW: EVIDENCE FROM EUROPEAN TARGET COUNTRIES

Author

Listed:
  • Mattoscio Nicola

    (University of Chieti-Pescara, Italy, Department of Quantitative Methods and Economic Theory)

  • Bucciarelli Edgardo

    (University of Chieti-Pescara, Italy, Department of Quantitative Methods and Economic Theory)

  • Odoardi Iacopo

    (University of Chieti-Pescara, Italy, School of Advanced Studies, Doctorate of Philosophy, XXIV cycle)

  • Persico Tony Ernesto

    (University of Chieti-Pescara, Italy, School of Advanced Studies, Doctorate of Philosophy, XXVII cycle)

Abstract

In this paper Okun'(tm)s law is tested for six European selected countries in order to compare the responsiveness of unemployment to economic growth over the period 1981-2010. In the first section there is a survey of scientific works that have observed the empirical relationship between growth and unemployment. The countries selected are representative of different socio-economic contexts today existing in Europe, i.e. EU member countries, countries that adopt the Euro, and others which are candidates to join the EU or that although EU members have chosen not to adopt the Euro. Finally, we also refer to the U.S. and Canada, which are country-systems where the regularity of Okun'(tm)s rule of thumb was conceived. In particular, we intend to represent the data of the macroeconomic variables GDP and unemployment rate in their annual variations for a time series sufficiently long to show the occurrence of the supposed regularity, and then to investigate specific cases, which represent changes compared to the expected variations. In addition to any changes occurred over time in the studied relationship, these empirical observations, along with the reported literature, will help to draw conclusions about the differences regarding the inflexibility and responsiveness to changes in the aggregated output by the labor market of the countries involved in the study.

Suggested Citation

  • Mattoscio Nicola & Bucciarelli Edgardo & Odoardi Iacopo & Persico Tony Ernesto, 2012. "AN EXAMINATION OF OKUN'(tm)S LAW: EVIDENCE FROM EUROPEAN TARGET COUNTRIES," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 237-243, December.
    • Handle: RePEc:ora:journl:v:1:y:2012:i:2:p:237-243
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    References listed on IDEAS

    as
    1. Kaufman, Roger T., 1988. "An international comparison of Okun's laws," Journal of Comparative Economics, Elsevier, vol. 12(2), pages 182-203, June.
    2. Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-336, May.
    3. Weber, Christian E, 1995. "Cyclical Output, Cyclical Unemployment, and Okun's Coefficient: A New Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 433-445, Oct.-Dec..
    4. Paramsothy Silvapulle & Imad Moosa & Mervyn Silvapulle, 2004. "Asymmetry in Okun's law," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 353-374, May.
    5. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
    6. Gary Smith, 1974. "Okun's Law Revisited," Cowles Foundation Discussion Papers 380, Cowles Foundation for Research in Economics, Yale University.
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    More about this item

    Keywords

    economic growth; unemployment; European countries; estimation models;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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