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Cyclical Output, Cyclical Unemployment, and Okun's Coefficient: A New Approach

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Weber, Christian E

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Abstract

Estimates of Okun's coefficient are obtained using new estimates of cyclical GNP and cyclical unemployment rates for the post-war U.S. Empirical estimates of the coefficient are near -0.25, somewhat smaller in magnitude than other recent estimates obtained applying similar econometric techniques to different estimates of cyclical output and unemployment. Tests fail to reject the hypothesis of parameter stability across an hypothesized break between the third and fourth quarters of 1973, suggesting similar relationships between cyclical output and unemployment both before and after the supply shocks of the 1970s. Copyright 1995 by John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 10 (1995)
Issue (Month): 4 (Oct.-Dec.)
Pages: 433-45
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Handle: RePEc:jae:japmet:v:10:y:1995:i:4:p:433-45

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  2. Richard Harris & Brian Silverstone, 2000. "Asymmetric Adjustment of Unemployment and Output in New Zealand: Rediscovering Okun's Law," Working Papers in Economics 00/02, University of Waikato, Department of Economics. [Downloadable!]
  3. Ho-Chuan (River) Huang & Shu-Chin Lin, 2006. "A flexible nonlinear inference to Okun's relationship," Applied Economics Letters, Taylor and Francis Journals, vol. 13(5), pages 325-331, April. [Downloadable!] (restricted)
  4. St-Amant, P. & van Norden, S., 1997. "Measurement of the Output Gap: A Discussion of Recent Research at the Bank of Canada," Technical Reports 79, Bank of Canada. [Downloadable!]
  5. João Sousa Andrade, 2009. "The PIGS, does the Group Exist? An empirical macroeconomic analysis based on the Okun Law," GEMF Working Papers 2009-11, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
  6. Lalonde, René & Page, Jennifer & St-Amant, Pierre, 1998. "Une nouvelle méthode d'estimation de l'écart de production et son application aux États-Unis, au Canada et à l'Allemagne," Working Papers 98-21, Bank of Canada. [Downloadable!]
  7. Shigeru Wakita, 2006. "The Lost Decade in the Japanese Labor Market: Labor’s share and Okun’s Law," Labor Economics Working Papers 673, East Asian Bureau of Economic Research. [Downloadable!]
  8. Mayes , David G. & Virén , Matti, 2004. "Asymmetries in the Euro area economy," Research Discussion Papers 9/2004, Bank of Finland. [Downloadable!]
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  9. J. Breitung, . "Using a Latent Variables Representation to Estimate Structural VARs," Sonderforschungsbereich 373 1996-97, Humboldt Universitaet Berlin.
  10. Leopold Soegner & Alfred Stiassny, 2000. "A Cross-Country Study on Okun's Law," Working Papers geewp13, Vienna University of Economics and B.A. Research Group: Growth and Employment in Europe: Sustainability and Competitiveness. [Downloadable!]
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