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Regional evidence on Okun's Law in Czech Republic and Slovakia

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  • Durech, Richard
  • Minea, Alexandru
  • Mustea, Lavinia
  • Slusna, Lubica

Abstract

We present regional evidence on Okun's Law using original data for two emerging countries, namely the Czech Republic and Slovakia. We unveil the presence of important regional heterogeneities, as in many Czech and Slovak regions Okun's Law is not significant. Among the drivers of these regional differences, we outline the level of unemployment and output, domestic and foreign investments, and R&D and infrastructure spending. Subsequently, we show that unemployment, output, and domestic investment are equally related to regional magnitude non-linearities, when it comes to Czech and Slovak regions in which Okun's Law is at work. We draw upon these rich results to discuss policies that could be implemented to avoid underemployment traps in the Czech and Slovak regions.

Suggested Citation

  • Durech, Richard & Minea, Alexandru & Mustea, Lavinia & Slusna, Lubica, 2014. "Regional evidence on Okun's Law in Czech Republic and Slovakia," Economic Modelling, Elsevier, vol. 42(C), pages 57-65.
  • Handle: RePEc:eee:ecmode:v:42:y:2014:i:c:p:57-65
    DOI: 10.1016/j.econmod.2014.05.039
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    Cited by:

    1. Guisinger, Amy Y. & Hernandez-Murillo, Ruben & Owyang, Michael T. & Sinclair, Tara M., 2018. "A state-level analysis of Okun's law," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 239-248.
    2. Porras, María Sylvina & Martín-Román, Ángel L., 2017. "Self-employment and Okun’s Law relationship: the Spanish case," GLO Discussion Paper Series 157, Global Labor Organization (GLO).
    3. Kambale Kavese & Andrew Phiri, 2018. "A provincial perspective of nonlinear Okun's law for emerging markets: The case of South Africa," Working Papers 1819, Department of Economics, Nelson Mandela University.
    4. Bonaventura, Luigi & Cellini, Roberto & Sambataro, Mario, 2018. "Gender differences in Okun's law across the Italian regions," MPRA Paper 87557, University Library of Munich, Germany.
    5. repec:rfe:zbefri:v:35:y:2017:i:1:p:13-44 is not listed on IDEAS
    6. Valadkhani, Abbas & Smyth, Russell, 2015. "Switching and asymmetric behaviour of the Okun coefficient in the US: Evidence for the 1948–2015 period," Economic Modelling, Elsevier, vol. 50(C), pages 281-290.
    7. Miquel Clar-Lopez & Jordi López-Tamayo & Raúl Ramos, 2014. "Unemployment forecasts, time varying coefficient models and the Okun’s law in Spanish regions," Economics and Business Letters, Oviedo University Press, vol. 3(4), pages 247-262.
    8. Hélène Syed Zwick & S. Ali Shah Syed, 2016. "Augmented okun's law within the emu: working-time or employment adjustment? a structural equation model," Economics Bulletin, AccessEcon, vol. 36(1), pages 440-448.
    9. Martin Boďa & Petra Medveďová & Mariana Považanová, 2015. "(A)symetria v Okunovom zákone v štátoch Vyšehradskej skupiny
      [(A)symmetry in Okun’s Law in the Visegrad Group Countries]
      ," Politická ekonomie, University of Economics, Prague, vol. 2015(6), pages 741-758.
    10. Bande, Roberto & Martín-Román, Ángel L., 2017. "Regional differences in the Okun’s Relationship: New Evidence for Spain (1980-2015)," MPRA Paper 79833, University Library of Munich, Germany.
    11. repec:udc:esteco:v:45:y:2018:i:1:p:113-145 is not listed on IDEAS

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