Okun's Law: Fit at 50?
AbstractThis paper asks how well Okunâ€™s Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980. We find that Okunâ€™s Law isa strong and stable relationship in most countries, one that did not change substantiallyduring the Great Recession. Accounts of breakdowns in the Law, such as the emergence ofâ€œjobless recoveries,â€ are flawed. We also find that the coefficient in the relationshipâ€”the effect of a one percent change in output on the unemployment rateâ€”varies substantially across countries. This variation is partly explained by idiosyncratic features of national labormarkets, but it is not related to differences in employment protection legislation.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/10.
Date of creation: 14 Jan 2013
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- NEP-ALL-2013-02-16 (All new papers)
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- Sandrine Cazes & Sher Verick & Fares Al Hussami, 2013. "Why did unemployment respond so differently to the global financial crisis across countries? Insights from Okun’s Law," IZA Journal of Labor Policy, Springer, vol. 2(1), pages 1-18, December.
- Ryan W Herzog, 2013. "An Analysis of Okun's Law, the Natural Rate, and Voting Preferences for the 50 States," Economics Bulletin, AccessEcon, vol. 33(4), pages 2504-2517.
- Richter, Kaspar & Witkowski, Bartosz, 2014. "Does growth generate jobs in Eastern Europe and Central Asia ?," Policy Research Working Paper Series 6759, The World Bank.
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