IDEAS home Printed from https://ideas.repec.org/a/eej/eeconj/v17y1991i4p409-416.html
   My bibliography  Save this article

Unemployment and the GNP Gap: Okun's Law Revisited

Author

Listed:
  • Yu Hsing

    (Southeastern Louisiana University)

Abstract

This paper reexamines Okun's law by applying the Box-Cox transformation of variables. Major findings are that the effect of a change in the GNP gap on the unemployment rate varies from -0.280 in 1969.1 to -0.801 in 1982.4; the effect is larger (smaller) when the unemployment rate is higher (lower); and the linear form can be rejected at the 1 percent level. To reduce the unemployment rate by one percentage point in 1982.Q4, the author may overestimate the increase in actual real GNP by as much as $31 billion if an incorrect functional form is chosen.

Suggested Citation

  • Yu Hsing, 1991. "Unemployment and the GNP Gap: Okun's Law Revisited," Eastern Economic Journal, Eastern Economic Association, vol. 17(4), pages 409-416, Oct-Dec.
    • Handle: RePEc:eej:eeconj:v:17:y:1991:i:4:p:409-416
    as

    Download full text from publisher

    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume17/V17N4P409_416.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Seaks, Terry G & Layson, Stephen K, 1983. "Box-Cox Estimation with Standard Econometric Problems," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 160-164, February.
    2. Spitzer, John J, 1982. "A Primer on Box-Cox Estimation," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 307-313, May.
    3. Paul D. Thistle & John P. Formby, 1988. "On One Parameter Functional Forms for Lorenz Curves," Eastern Economic Journal, Eastern Economic Association, vol. 14(1), pages 81-85, Jan-Mar.
    4. Smyth, David J & Dua, Pami, 1988. "Public Perceptions of Macroeconomic Policy: An Econometric Analysis of the Reagan Presidency," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 357-361, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
    2. Oliva, Leobaldo Enrique Molero & Eduardo, Salcedo Muñoz Virgilio & Vásquez, John Alexander Campuzano & Copo, Holger Fabrizzio Bejarano, 2019. "Análisis econométrico del comportamiento del desempleo en el Ecuador (segundo trimestre 2007 a cuarto trimestre 2017)," Revista Tendencias, Universidad de Narino, vol. 20(2), pages 22-48, July.
    3. Porras-Arena, M. Sylvina & Martín-Román, Ángel L., 2023. "The heterogeneity of Okun's law: A metaregression analysis," Economic Modelling, Elsevier, vol. 128(C).
    4. Domicián Máté, 2010. "Estimating Labour Market Performance in Twenty-Three OECD Countries, 1980-2009," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(38), pages 213-232, December.
    5. Mustafa Şit, 2024. "The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 11(1), pages 76-85, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Santiago Cajiao Raigosa & Luis Fernando Melo Velandia & Daniel Parra Amado, 2014. "Pronósticos para una economía menos volátil: el caso colombiano," Coyuntura Económica, Fedesarrollo, December.
    2. Krzysztof Berbeka & Mikołaj Czajkowski & Agnieszka Markowska, 2012. "Municipal Wastewater Treatment in Poland – Efficiency, Costs and Returns to Scale," Working Papers 2012-03, Faculty of Economic Sciences, University of Warsaw.
    3. Mason, Patrick L., 1994. "An empirical derivation of the industry wage equation," MPRA Paper 11325, University Library of Munich, Germany.
    4. Barry T. Hirsch, 1985. "Poverty, Transfers, and Economic Growth," Public Finance Review, , vol. 13(1), pages 81-98, January.
    5. Adrian C. Darnell, 1994. "A Dictionary Of Econometrics," Books, Edward Elgar Publishing, number 118.
    6. Magazzino, Cosimo, 2010. "The Economic Policy of Ronald Reagan. Between Supply-Side and Keynesianism," MPRA Paper 25537, University Library of Munich, Germany.
    7. Hans-Jurgen Engelbrecht, 1997. "The Impact of International Trade on Real Wages in U.S. Manufacturing, 1985-1989," International Economic Journal, Taylor & Francis Journals, vol. 11(1), pages 69-86.
    8. Zvi Schwartz & Mehmet Altin & Manisha Singal, 2017. "Performance measures for strategic revenue management: RevPAR versus GOPPAR," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(4), pages 357-375, August.
    9. repec:prg:jnlpep:v:preprint:id:651:p:1-19 is not listed on IDEAS
    10. Patricia Dörr & Jan Pablo Burgard, 2019. "Data-driven transformations and survey-weighting for linear mixed models," Research Papers in Economics 2019-16, University of Trier, Department of Economics.
    11. Ather Akbari & Tomson Ogwang, 1997. "The Canadian earnings functions under test," Applied Economics Letters, Taylor & Francis Journals, vol. 4(2), pages 133-139.
    12. Magazzino, Cosimo, 2010. "The economic policy of Ronald Reagan," MPRA Paper 23930, University Library of Munich, Germany.
    13. James Bugden, 2013. "Renovations and the Repeat-Sales House Price Index," Working Papers 2013.08, School of Economics, La Trobe University.
    14. Yu Hsing, 2007. "Currency Substitution, Capital Mobility and Functional Forms of Money Demand in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 35-48, Jan-Jun.
    15. Paul Allanson, 2012. "On the characterization and economic evaluation of income mobility as a process of distributional change," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 505-528, December.
    16. Jurgen Kahler & Adrian Sargeant, 2002. "The size effect in the administration costs of charities," European Accounting Review, Taylor & Francis Journals, vol. 11(2), pages 215-243.
    17. Louis Mesnard, 2022. "About some difficulties with the functional forms of Lorenz curves," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 939-950, December.
    18. Badi H. Baltagi & Dong Li, 2001. "LM Tests for Functional Form and Spatial Error Correlation," International Regional Science Review, , vol. 24(2), pages 194-225, April.
    19. Lukáš Malec & Alžbeta Kiráľová, 2018. "Evaluating Competencies of Graduates in Tourism as a Prerequisite for Future Employability," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(2), pages 196-214.
    20. Brorsen, B. Wade & Grant, Warren R. & Rister, M. Edward, 1988. "Some Effects Of Rice Quality On Rough Rice Prices," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(1), pages 1-10, July.
    21. repec:rri:wpaper:200505 is not listed on IDEAS
    22. Y. K. Tse & Z. L. Yang, 2004. "Tests of Functional Form and Heteroscedasticity," Econometric Society 2004 Far Eastern Meetings 424, Econometric Society.

    More about this item

    Keywords

    Okun's Law; Unemployment Rate; Unemployment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eej:eeconj:v:17:y:1991:i:4:p:409-416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victor Matheson, College of the Holy Cross (email available below). General contact details of provider: https://edirc.repec.org/data/eeaa1ea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.