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Regional evidence on Okun's Law in Czech Republic and Slovakia

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  • Durech, Richard
  • Minea, Alexandru
  • Mustea, Lavinia
  • Slusna, Lubica

Abstract

We present regional evidence on Okun's Law using original data for two emerging countries, namely the Czech Republic and Slovakia. We unveil the presence of important regional heterogeneities, as in many Czech and Slovak regions Okun's Law is not significant. Among the drivers of these regional differences, we outline the level of unemployment and output, domestic and foreign investments, and R&D and infrastructure spending. Subsequently, we show that unemployment, output, and domestic investment are equally related to regional magnitude non-linearities, when it comes to Czech and Slovak regions in which Okun's Law is at work. We draw upon these rich results to discuss policies that could be implemented to avoid underemployment traps in the Czech and Slovak regions.

Suggested Citation

  • Durech, Richard & Minea, Alexandru & Mustea, Lavinia & Slusna, Lubica, 2014. "Regional evidence on Okun's Law in Czech Republic and Slovakia," Economic Modelling, Elsevier, vol. 42(C), pages 57-65.
    • Handle: RePEc:eee:ecmode:v:42:y:2014:i:c:p:57-65
    DOI: 10.1016/j.econmod.2014.05.039
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    Cited by:

    1. Guisinger, Amy Y. & Hernandez-Murillo, Ruben & Owyang, Michael T. & Sinclair, Tara M., 2018. "A state-level analysis of Okun's law," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 239-248.
    2. Bande, Roberto & Martín-Román, Ángel, 2018. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 41, pages 137-165.
    3. Goto, Eiji & Bürgi, Constantin, 2021. "Sectoral Okun's law and cross-country cyclical differences," Economic Modelling, Elsevier, vol. 94(C), pages 91-103.
    4. Gina Cristina Dimian & Liviu Stelian Begu & Josef Jablonsky, 2017. "Unemployment and labour market mismatch in the European Union Countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 13-44.
    5. Kavese Kambale & Phiri Andrew, 2020. "A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(3), pages 59-76, September.
    6. Omoshoro-Jones, Oyeyinka Sunday, 2021. "Asymmetry in Okun’s Law Revisited: New evidence on cyclical unemployment–cyclical output trade-off in the Free State Province using NARDL model," MPRA Paper 107126, University Library of Munich, Germany.
    7. Porras-Arena, M. Sylvina & Martín-Román, Ángel L., 2023. "The heterogeneity of Okun's law: A metaregression analysis," Economic Modelling, Elsevier, vol. 128(C).
    8. Bod’a, Martin & Považanová, Mariana, 2021. "Output-unemployment asymmetry in Okun coefficients for OECD countries," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 307-323.
    9. Mutascu, Mihai & Sokic, Alexandre, 2021. "Okun's law in the US: New insights in time and frequency," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 207-222.
    10. Valadkhani, Abbas & Smyth, Russell, 2015. "Switching and asymmetric behaviour of the Okun coefficient in the US: Evidence for the 1948–2015 period," Economic Modelling, Elsevier, vol. 50(C), pages 281-290.
    11. Marcel Novák & Ľubomír Darmo, 2019. "Okun´s Law over the Business Cycle: Does it Change in the EU Countries after the Financial Crisis?," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(2), pages 235-254.
    12. Miquel Clar-Lopez & Jordi López-Tamayo & Raúl Ramos, 2014. "Unemployment forecasts, time varying coefficient models and the Okun’s law in Spanish regions," Economics and Business Letters, Oviedo University Press, vol. 3(4), pages 247-262.
    13. Porras, María Sylvina & Martín-Román, Ángel L., 2017. "Self-employment and Okun’s Law relationship: the Spanish case," MPRA Paper 83292, University Library of Munich, Germany.
    14. José Gabriel Castillo & Carla María Salas, 2018. "Comparabilidad y ajustes metodológicos de las estadísticas laborales: El caso de la tasa de desempleo en Ecuador," Estudios de Economia, University of Chile, Department of Economics, vol. 45(1 Year 20), pages 113-145, June.
    15. Ousama Ben-Salha & Zouhair Mrabet, 2019. "Is Economic Growth Really Jobless? Empirical Evidence from North Africa," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(4), pages 598-624, December.
    16. Louail Bilal & Ben Haj Hamida Hayet, 2021. "Asymmetry Relationship between Economic Growth and Unemployment Rates in the Arab countries: Application of the OKUN Law during 1960-2017," Management, Sciendo, vol. 25(2), pages 1-21, December.
    17. repec:prg:jnlpep:v:preprint:id:694:p:1-20 is not listed on IDEAS
    18. Porras-Arena, M. Sylvina & Martín-Román, Ángel L., 2019. "Self-employment and the Okun's law," Economic Modelling, Elsevier, vol. 77(C), pages 253-265.
    19. Luigi Bonaventura & Roberto Cellini & Mario Sambataro, 2020. "Gender differences in the Okun's law across the Italian regions," Economics Bulletin, AccessEcon, vol. 40(4), pages 2780-2789.
    20. Martin Boďa & Mariana Považanová, 2020. "Formal and statistical aspects of estimating Okun's law at a regional level," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 1113-1136, August.
    21. Elhorst, J. Paul & Emili, Silvia, 2022. "A spatial econometric multivariate model of Okun's law," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    22. Cuesta, Lizeth, 2020. "Impacto de la política de empleo juvenil en la disminución del desempleo en los países de la Unión Europea, período 2002-2017 [Impact of youth employment policy on the reduction of unemployment in ," MPRA Paper 111026, University Library of Munich, Germany, revised 08 Aug 2021.
    23. Hélène Syed Zwick & S. Ali Shah Syed, 2016. "Augmented okun's law within the emu: working-time or employment adjustment? a structural equation model," Economics Bulletin, AccessEcon, vol. 36(1), pages 440-448.
    24. Martin Boďa & Petra Medveďová & Mariana Považanová, 2015. "(A)symetria v Okunovom zákone v štátoch Vyšehradskej skupiny [(A)symmetry in Okun's Law in the Visegrad Group Countries]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(6), pages 741-758.

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