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Firms' confidence and Okun's law in OECD countries

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  • de Mendonça, Helder Ferreira
  • de Oliveira, Diego S.P.

Abstract

Based on panel quarterly data regarding fifteen OECD countries for the period from 2001 to 2016, we provide empirical evidence for the relationship between firms' confidence and Okun's coefficient. In particular, we analyze if changes (updates) and persistent changes of firms' confidence have different implications for the Okun's coefficient. Based on Business Confidence Index and Managerial Sentiment Indicator we build indicators for measuring updates of the firms' confidence and performed several regressions. The findings denote that updates of medium-term as well as persistent updates of the firm's confidence are able to change the link between unemployment and output growth.

Suggested Citation

  • de Mendonça, Helder Ferreira & de Oliveira, Diego S.P., 2019. "Firms' confidence and Okun's law in OECD countries," Economic Modelling, Elsevier, vol. 78(C), pages 98-107.
    • Handle: RePEc:eee:ecmode:v:78:y:2019:i:c:p:98-107
    DOI: 10.1016/j.econmod.2018.08.015
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    More about this item

    Keywords

    Okun's coefficient; Firms' confidence; Unemployment; Output gap;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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