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The Specifics Of Okun’S Law In The Romanian Economy Between 2007 And 2013

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  • PITORAC RUXANDRA

    (WEST UNIVERSITY OF TIMISOARA)

Abstract

The objective of this article is to study the Romanian economy after 2007 and to identify its main characteristics related to the GDP and unemployment sector. The research starts with a brief theoretical review on Okun's coefficient and presents two approaches identified in the literature, used in the study of Okun's law: the ”firstdifference model” and the „gap model”. In this paperwork we have chosen the second approach on Okun's law to determine the specific of Romanian economy after integration in the European Union. Thus, was performed the quantitative analysis of the two macroeconomic indicators, with the help of the Hodrick-Prescott filter, the output gap and the unemployment gap were calculated, and by empirical analyzing the correlations between them with the help of a single factor regression model, the Okun's law for Romanian economy was obtained. The research results revealed that, in the analyzed period, fiscal and monetary policies were not sufficient to reduce unemployment, therefor other types of policies had to be implemented.

Suggested Citation

  • Pitorac Ruxandra, 2015. "The Specifics Of Okun’S Law In The Romanian Economy Between 2007 And 2013," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 50-53, February.
    • Handle: RePEc:cbu:jrnlec:y:2015:v:1ii:p:50-53
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    References listed on IDEAS

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    1. Kiley, Michael T., 2013. "Output gaps," Journal of Macroeconomics, Elsevier, vol. 37(C), pages 1-18.
    2. Zanin, Luca, 2014. "On Okun’s law in OECD countries: An analysis by age cohorts," Economics Letters, Elsevier, vol. 125(2), pages 243-248.
    3. Lucchetta, Marcella & Paradiso, Antonio, 2014. "Sluggish US employment recovery after the Great Recession: Cyclical or structural factors?," Economics Letters, Elsevier, vol. 123(2), pages 109-112.
    4. Ball, Laurence & Jalles, João Tovar & Loungani, Prakash, 2015. "Do forecasters believe in Okun’s Law? An assessment of unemployment and output forecasts," International Journal of Forecasting, Elsevier, vol. 31(1), pages 176-184.
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