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Estimating the trajectories of the Okun's coefficient and NAIRU with the rolling regression method: Evidence from Lebanon

Author

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  • Jean-François Verne

    (Université Saint-Joseph de Beyrouth, Faculté de Sciences Economiques)

Abstract

We use the rolling regression method to estimate the Okun relationship and the Non-Accelerating Inflation Rate of Unemployment (NAIRU) in Lebanon between 1991 and 2021.We found that a stagflation phenomenon exists, and the NAIRU is high. It turns out that the Okun coefficient is low and unstable. In addition, we show that an increase in the unemployment rate above the NAIRU entails a decrease in the GDP growth rate (under the potential GDP growth rate) and increases the inflation rate.

Suggested Citation

  • Jean-François Verne, 2024. "Estimating the trajectories of the Okun's coefficient and NAIRU with the rolling regression method: Evidence from Lebanon," Economics Bulletin, AccessEcon, vol. 44(1), pages 140-153.
    • Handle: RePEc:ebl:ecbull:eb-23-00361
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    References listed on IDEAS

    as
    1. Alexander Doser & Ricardo Nunes & Nikhil Rao & Viacheslav Sheremirov, 2023. "Inflation expectations and nonlinearities in the Phillips curve," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 38(4), pages 453-471, June.
    2. Zongwu Cai & Ted Juhl, 2020. "The Distribution Of Rolling Regression Estimators," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202220, University of Kansas, Department of Economics, revised Dec 2022.
    3. Bhattarai, Keshab, 2016. "Unemployment–inflation trade-offs in OECD countries," Economic Modelling, Elsevier, vol. 58(C), pages 93-103.
    4. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76(4), pages 678-678.
    5. Zongwu Cai & Ted Juhl, 2020. "The Distribution Of Rolling Regression Estimators," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202218, University of Kansas, Department of Economics, revised Dec 2022.
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    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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