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The Causality Between Economic Growth, Unemployment And Taxation: A Revisited Analysis Of The Okun’S Law

Author

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  • Jean-François Verne

Abstract

En recourant à une analyse en données de panel concernant 15 pays de l’OCDE sur la période 1979-2006, cet article revisite la loi d’OKUN en intégrant aux variables taux de croissance du PIB et variation du taux de chômage, les taux d’impôts sur les revenus, les profits et les biens et services mesurés en pourcentage du PIB. A travers des modèles de causalité bivariée et trivariée, ce papier confirme la relation d’OKUN pour l’ensemble des pays de l’échantillon et invalide les sens de causalité entre croissance, chômage et impôts décrits par la théorie de l’offre. / By means of an analysis in data panel regarding 15 OECD countries over the period 1979-2006, this article revisits the Okun’s Law and joins into variables growth rate of the GDP and variation of the unemployment rate, the tax rates on income, corporate and consumption measured as percentage of the GDP. Using bi-varied and tri-varied causality models this paper confirms the OKUN’s relation concerning the sample countries and invalidates the causal directions between growth, unemployment and taxes as described by the supply side theory.

Suggested Citation

  • Jean-François Verne, 2007. "The Causality Between Economic Growth, Unemployment And Taxation: A Revisited Analysis Of The Okun’S Law," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(3), pages 361-383.
    • Handle: RePEc:bxr:bxrceb:2013/80550
    Note: This is a translation of: La causalité entre la croissance économique, le chômage et les impots :une analye revisitée de la Loi d’OKUN
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    References listed on IDEAS

    as
    1. Julien Fouquau, 2005. "Effets de Seuil dans la Loi d'Okun: Une Evaluation sur Données de Panel," Post-Print halshs-00222962, HAL.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    3. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    4. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    5. Granger, Clive W. J., 2003. "Some aspects of causal relationships," Journal of Econometrics, Elsevier, vol. 112(1), pages 69-71, January.
    6. Jean-Jacques Durand & Marilyne Huchet, 2003. "La loi d'Okun comme indicateur de dispersion des pays européens : peut-on parler de convergence des structures?," Post-Print halshs-00107966, HAL.
    7. Christophe Hurlin, 2004. "Testing Granger causality in Heterogeneous panel data models with fixed coefficients," Post-Print halshs-00257395, HAL.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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