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The Validity of Okun¡¯s Law in North Macedonia

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  • Despina Tumanoska

Abstract

This paper investigates the relationship between unemployment rates (youth and total) and GDP growth in North Macedonia, within the context of Okun¡¯s Law. The econometric analysis of the paper is based on The Auto-regression Distributed Lags Model, using data for the period 1991-2017 collected from different data basis. The econometric analysis suggests that there is a statistically significant long-run relationship between the GDP growth and total unemployment in North Macedonia, at the 1% level of probability. In particular, the findings show that a 1% increase in the economic growth will lead to decrease of the total unemployment for 2.57%. No short- or long-run relationship between GDP growth and youth unemployment was detected.

Suggested Citation

  • Despina Tumanoska, 2019. "The Validity of Okun¡¯s Law in North Macedonia," Business and Economic Research, Macrothink Institute, vol. 9(2), pages 160-168, June.
    • Handle: RePEc:mth:ber888:v:9:y:2019:i:2:p:160-168
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    References listed on IDEAS

    as
    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    2. Zagler, Martin, 2003. "The Dynamics of Economic Growth and Unemployment in Major European Countries: Analysis of Okun´s Law," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 3(3).
    3. Marjan Petreski & Nikica Mojsoska-Blazevski & Marcelo Bergolo, 2017. "Labor-Market Scars When Youth Unemployment is Extremely High: Evidence from Macedonia," Eastern European Economics, Taylor & Francis Journals, vol. 55(2), pages 168-196, March.
    4. Josef C Brada & Enrico Marelli & Marcello Signorelli, 2014. "Introduction: Young People and the Labor Market: Key Determinants and New Evidence," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 56(4), pages 556-566, December.
    5. Francesco Pastore & Luca Giuliani, 2015. "The determinants of youth unemployment. A panel data analysis," Discussion Papers 2_2015, CRISEI, University of Naples "Parthenope", Italy.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Okun¡¯s law; Unemployment; Youth unemployment; Economic output; North Macedonia;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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