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Okun’s law and anelastic relaxation in advanced and developing economies

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  • Raymond J. Hawkins

    (University of California
    University of Arizona)

Abstract

We show that the anelastic form of Okun’s law describes the output-unemployment relationship in a large number of advanced and developing counties well, and find two novel forms of this relationship: a Voigt-form of Okun’s law as well as a purely dynamical form of Okun’s law with no long-term output-unemployment tradeoff. We also find that the time-dependence in the anelastic form of Okun’s law reconciles the conflicting observations of general linearity and occasional nonlinearity by generalizing the output-unemployment relationship from a simple line to an ellipse known as an Okun loop.

Suggested Citation

  • Raymond J. Hawkins, 2024. "Okun’s law and anelastic relaxation in advanced and developing economies," Evolutionary and Institutional Economics Review, Springer, vol. 21(2), pages 261-276, September.
    • Handle: RePEc:spr:eaiere:v:21:y:2024:i:2:d:10.1007_s40844-024-00280-4
    DOI: 10.1007/s40844-024-00280-4
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    References listed on IDEAS

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    1. Malley, Jim & Molana, Hassan, 2008. "Output, unemployment and Okun's law: Some evidence from the G7," Economics Letters, Elsevier, vol. 101(2), pages 113-115, November.
    2. K. Burggraeve & G. de Walque & H. Zimmer, 2015. "The relationship between economic growth and employment," Economic Review, National Bank of Belgium, issue i, pages 32-52, June.
    3. Laurence Ball & Davide Furceri & Daniel Leigh & Prakash Loungani, 2019. "Does One Law Fit All? Cross-Country Evidence on Okun’s Law," Open Economies Review, Springer, vol. 30(5), pages 841-874, November.
    4. Hamada, Koichi & Kurosaka, Yoshio, 1984. "The relationship between production and unemployment in Japan : Okun's law in comparative perspective," European Economic Review, Elsevier, vol. 25(1), pages 71-94, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Unemployment; Okun’s law; Anelasticity; Okun loops; Developing economies;
    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
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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