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A Cross-Province Comparison of Okun's Coefficient for Canada

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Abstract

In this paper, we estimate Okun's coefficients for ten Canadian provinces using real GDP and unemployment rate data across the provinces. We obtain an average estimated Okun's coefficient of -1.58 under the Hodrick-Prescott detrending method and -1.32 under the quadratic detrending method. There is relative stability of the coefficients across the two detrending methods. Generally, the cost of unemployment in terms of the loss in real GDP is higher in the bigger and more industrialized provinces ranging from -2.14 for Ontario to less than -1 for the Maritime provinces.

Suggested Citation

  • Kwami Adanu, 2002. "A Cross-Province Comparison of Okun's Coefficient for Canada," Econometrics Working Papers 0204, Department of Economics, University of Victoria.
    • Handle: RePEc:vic:vicewp:0204
    Note: ISSN 1485-6441
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    File URL: https://www.uvic.ca/socialsciences/economics/_assets/docs/econometrics/ewp0204.pdf
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    References listed on IDEAS

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    1. Christian Weber & James West, 1996. "Functional form in regression models of Okun's law," Applied Economics Letters, Taylor & Francis Journals, vol. 3(9), pages 607-609.
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    More about this item

    Keywords

    Okun's law; detrending; unit roots; provincial data;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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