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Bayesian Linear Estimation of Okun Coefficient for Romania: Sensitivity to Priors

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  • KORI YAHIA, Abdellah

Abstract

I use the Bayesian approach in order to derive an estimation of Okun coefficient for Romania. The data used is at quarterly frequency and it consists in the unemployment rate and GDP between 2000 and 2009. I use three different priors, a normal one, a beta prior and a uniform prior for the parameter associated to the Okun coefficient. The results indicate an Okun coefficient around -0.20, with the prior distributions having a mild effect on posterior mean results.

Suggested Citation

  • KORI YAHIA, Abdellah, 2018. "Bayesian Linear Estimation of Okun Coefficient for Romania: Sensitivity to Priors," MPRA Paper 84140, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:84140
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    References listed on IDEAS

    as
    1. Friedman, Benjamin M & Wachter, Michael L, 1974. "Unemployment: Okun's Law, Labor Force, and Productivity," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 167-176, May.
    2. Caraiani, Petre, 2006. "Alternative Methods of Estimating the Okun Coefficient. Applications for Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(4), pages 82-89, December.
    3. Evans, George W, 1989. "Output and Unemployment Dynamics in the United States: 1950-1985," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(3), pages 213-237, July-Sept.
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    More about this item

    Keywords

    dynamic linear models; Bayesian techniques; unemployment; Okun coefficient; simulation techniques;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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