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The Relationship Between Output Growth and Unemployment: A Re‐examination of Okun's Law in Australia

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  • D. T. Nguyen
  • A. Mahinda Siriwardana

Abstract

In this article, we investigate the questions of whether some form of Okun's Law holds for Australia, and if so whether the Okun relationship has been stable. The results indicate that alternative formulations of the ‘law’ do not give rise to numerically similar parameter estimates. Nevertheless, one of these formulations yields estimates which appear to be both plausible and consistent with results from previous analyses. This particular formulation suggests that Okun's relationship in Australia underwent a structural change around 1974. The parameter estimates obtained can be regarded as rules of thumb which may be useful in discussing broad consequences of policy actions.

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  • D. T. Nguyen & A. Mahinda Siriwardana, 1988. "The Relationship Between Output Growth and Unemployment: A Re‐examination of Okun's Law in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 21(1), pages 16-27, March.
    • Handle: RePEc:bla:ausecr:v:21:y:1988:i:1:p:16-27
    DOI: 10.1111/j.1467-8462.1988.tb00533.x
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    References listed on IDEAS

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    1. Thurow, Lester, 1983. "Dangerous Currents: The State of Economics," OUP Catalogue, Oxford University Press, number 9780198771838.
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    Cited by:

    1. João Tovar Jalles, 2019. "On the Time‐Varying Relationship between Unemployment and Output: What shapes it?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 66(5), pages 605-630, November.
    2. Valadkhani, Abbas, 2006. "Unemployment Conundrum in Iran," Economics Working Papers wp06-15, School of Economics, University of Wollongong, NSW, Australia.
    3. Davide Furceri & João Tovar Jalles & Prakash Loungani, 2020. "On the Determinants of the Okun’s Law: New Evidence from Time-Varying Estimates," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(4), pages 661-700, December.
    4. João Sousa Andrade, 2007. "Uma Aplicação da Lei de Okun em Portugal," GEMF Working Papers 2007-04, GEMF, Faculty of Economics, University of Coimbra.
    5. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    6. 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, Faculty of Economics, University of Coimbra.
    7. Oberst, Christian & Oelgemöller, Jens, 2013. "Economic Growth and Regional Labor Market Development in German Regions: Okun’s Law in a Spatial Context," FCN Working Papers 5/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).

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