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The role of spatial GDP spillovers in state-level Okun’s law

Author

Listed:
  • Arabinda Basistha

    (West Virginia University)

  • Casto Martin Montero Kuscevic

    (West Virginia University
    American University of Beirut)

Abstract

Trade and labor mobility linkages in an economic union suggest the possibility of spatial GDP spillovers in empirical models of state-level Okun’s law. We expand and estimate the state-level Okun’s law with spatial GDP spillovers and national output growth. The estimates of state-specific GDP growth effect on state unemployment rate changes drop substantially in the expanded models. State GDP growths that are associated with regional and national GDP growths have much bigger effect on state unemployment rates. The models show a large improvement in the fit of the regressions. The results are primarily driven by employment changes and not by labor force changes. The results support the need for coordination in state-level economic policies.

Suggested Citation

  • Arabinda Basistha & Casto Martin Montero Kuscevic, 2017. "The role of spatial GDP spillovers in state-level Okun’s law," Letters in Spatial and Resource Sciences, Springer, vol. 10(3), pages 353-360, October.
    • Handle: RePEc:spr:lsprsc:v:10:y:2017:i:3:d:10.1007_s12076-017-0189-7
    DOI: 10.1007/s12076-017-0189-7
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    References listed on IDEAS

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    Cited by:

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    2. Elhorst, J. Paul & Emili, Silvia, 2022. "A spatial econometric multivariate model of Okun's law," Regional Science and Urban Economics, Elsevier, vol. 93(C).

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    More about this item

    Keywords

    Okun’s law; State unemployment; State GDP; Spatial spillovers;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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