Bayesian Linear Estimation of Okun Coefficient for Romania: Sensitivity to Priors Distributions
I use the Bayesian approach in order to derive an estimation of Okun coefficient for Romania. The data used is at quarterly frequency and it consists in the unemployment rate and GDP between 2000 and 2009. I use three different priors, a normal one, a beta prior and a uniform prior for the parameter associated to the Okun coefficient. The results indicate an Okun coefficient around -0.20, with the prior distributions having a mild effect on posterior mean results.
Volume (Year): 13 (2010)
Issue (Month): 38 (December)
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- Prachowny, Martin F J, 1993. "Okun's Law: Theoretical Foundations and Revised Estimates," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 331-36, May.
- Lee, Jim, 2000. "The Robustness of Okun's Law: Evidence from OECD Countries," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 331-356, April.
- Raluca Georgiana Popescu (Robu), 2010. "The Impact of Foreign Direct Investments on Labour Productivity: A review of the Evidence and Implications," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(36), pages 137-153, June.
- Caraiani, Petre, 2006. "Alternative Methods of Estimating the Okun Coefficient. Applications for Romania," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 3(4), pages 82-89, December.
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