Okun's Law, Asymmetries and Regional Spillovers: Evidence from Virginia Metropolitan Statistical Areas and the District of Columbia
The purpose of this paper is to examine the strength of the relationship between unemployment and GDP, the extent to which this relationship has been stable in Virginia metropolitan statistical areas (MSA) during the Great Recession and to examine the importance of regional spillovers in Okun’s law. Our results suggest that regional spillovers are very important in local labor markets and in defining the relationship observed at the national level. The MSA level data further supports asymmetries in Okun's law. The weaker direct relationship between GDP and unemployment at the local level suggests that while federal fiscal and monetary policies to stimulate aggregate demand during periods of economic recovery may be effective, over time, in reducing the unemployment rate, local economic development policies are not effective in achieving the substantial short term reduction in unemployment needed during recovery. The strong business cycle effects observed in the state MSA, relative to the U.S., suggests that countercyclical policies are fundamentally important and should be targeted more generally to exploit regional spillovers.
|Date of creation:||26 Mar 2014|
|Date of revision:|
|Contact details of provider:|| Postal: P.O. Box 8795, Williamsburg, VA 23187-8795|
Phone: (757) 221-4311
Fax: (757) 221-2390
Web page: http://www.wm.edu/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dimitris Christopoulos, 2004.
"The relationship between output and unemployment: Evidence from Greek regions,"
Economics of Governance,
Springer, vol. 83(3), pages 611-620, 07.
- Dimitris Christopoulos, 2004. "The relationship between output and unemployment: Evidence from Greek regions," Papers in Regional Science, Springer;Regional Science Association International, vol. 83(3), pages 611-620, 07.
- Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003.
"Testing for unit roots in heterogeneous panels,"
Journal of Econometrics,
Elsevier, vol. 115(1), pages 53-74, July.
- Tom Doan, . "IPSHIN: RATS procedure to implement Im, Pesaran and Shin panel unit root test," Statistical Software Components RTS00098, Boston College Department of Economics.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995. "Testing for Unit Roots in Heterogeneous Panels," Cambridge Working Papers in Economics 9526, Faculty of Economics, University of Cambridge.
- Nicolas Debarsy & Cem Ertur & James P. Lesage, 2012.
"Interpreting Dynamic Space-Time Panel Data Models,"
- Freeman, Donald G, 2001. "Panel Tests of Okun's Law for Ten Industrial Countries," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 511-23, October.
- Oberst, Christian & Oelgemöller, Jens, 2013. "Economic Growth and Regional Labor Market Development in German Regions: Okun’s Law in a Spatial Context," FCN Working Papers 5/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
- M. Yazgan & Hakan Yilmazkuday, 2009. "Okun’s convergence within the US," Letters in Spatial and Resource Sciences, Springer, vol. 2(2), pages 109-122, October.
- Aki Kangasharju & Christophe Tavéra & Peter Nijkamp, 2012.
"Regional growth and unemployment: the validity of Okun's law for the Finnish regions,"
- Aki Kangasharju & Christophe Tavera & Peter Nijkamp, 2012. "Regional Growth and Unemployment: The Validity of Okun's Law for the Finnish Regions," Spatial Economic Analysis, Taylor & Francis Journals, vol. 7(3), pages 381-395, September.
- Kangasharju, A. & Tavera, C. & Nijkamp, P., 2011. "Regional growth and unemployment. The validity of Okun's law for the Finnish regions," Serie Research Memoranda 0006, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- John Connaughton & Ronald Madsen, 2009. "Regional implications of the 2001 recession," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(2), pages 491-507, June.
- Paramsothy Silvapulle & Imad Moosa & Mervyn Silvapulle, 2004. "Asymmetry in Okun's law," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 353-374, May.
- Marie-Estelle Binet & François Facchini, 2013. "Okun's Law in the French Regions: A Cross-Regional Comparison," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00812549, HAL.
- Gerald Carlino & Robert P. Inman, 2013.
"Local Deficits and Local Jobs: Can U.S. States Stabilize Their Own Economies?,"
NBER Working Papers
18930, National Bureau of Economic Research, Inc.
- Carlino, Gerald A. & Inman, Robert P., 2013. "Local deficits and local jobs: Can US states stabilize their own economies?," Journal of Monetary Economics, Elsevier, vol. 60(5), pages 517-530.
- Gerald A. Carlino & Robert P. Inman, 2013. "Local deficits and local jobs: can U.S. statess stabilize their own economies?," Working Papers 13-11, Federal Reserve Bank of Philadelphia.
- Holmes, Mark J. & Silverstone, Brian, 2006.
"Okun's law, asymmetries and jobless recoveries in the United States: A Markov-switching approach,"
Elsevier, vol. 92(2), pages 293-299, August.
- Mark J. Holmes & Brian Silverstone, 2005. "Okun's Law, Asymmetries and Jobless Recoveries in the United States: A Markov-Switching Approach," Working Papers in Economics 05/06, University of Waikato, Department of Economics.
- Weber, Christian E, 1995. "Cyclical Output, Cyclical Unemployment, and Okun's Coefficient: A New Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(4), pages 433-45, Oct.-Dec..
- Enrico Moretti, 2010.
"Local Labor Markets,"
NBER Working Papers
15947, National Bureau of Economic Research, Inc.
- Perron, Pierre, 1989.
"The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis,"
Econometric Society, vol. 57(6), pages 1361-1401, November.
- Perron, P, 1988. "The Great Crash, The Oil Price Shock And The Unit Root Hypothesis," Papers 338, Princeton, Department of Economics - Econometric Research Program.
- Edward S. Knotek & II, 2007. "How useful is Okun's law?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 73-103.
- Blackley, Paul R., 1991. "The measurement and determination of Okun's Law: Evidence from state economies," Journal of Macroeconomics, Elsevier, vol. 13(4), pages 641-656.
- Nicholas Apergis & Anthony Rezitis, 2003. "An examination of Okun's law: evidence from regional areas in Greece," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1147-1151.
- Michael Owyang & Jeremy Piger & Howard Wall, 2011.
"Discordant City Employment Cycles,"
ERSA conference papers
ersa11p1525, European Regional Science Association.
- Michael T. Owyang & Jeremy M. Piger & Howard J. Wall, 2010. "Discordant city employment cycles," Working Papers 2010-019, Federal Reserve Bank of St. Louis.
- Owyang, Michael T. & Piger, Jeremy & Wall, Howard J., 2010. "Discordant city employment cycles," MPRA Paper 30757, University Library of Munich, Germany.
- Owyang, Michael T. & Sekhposyan, Tatevik, 2012. "Okun’s law over the business cycle: was the great recession all that different?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 399-418.
- Olivier J. Blanchard & Lawrence H. Summers, 1986.
"Hysteresis in Unemployment,"
NBER Working Papers
2035, National Bureau of Economic Research, Inc.
- Rui M. Pereira, 2013. "Okun's Law across the Business Cycle and during the Great Recession: A Markov Switching Analysis," Working Papers 139, Department of Economics, College of William and Mary.
- Olivier J. Blanchard & Lawrence H. Summers, 1986.
"Hysteresis and the European Unemployment Problem,"
427, Massachusetts Institute of Technology (MIT), Department of Economics.
- Cristiano Perugini, 2008.
"Employment Intensity of Growth in Italy A Note Using Regional Data,"
Quaderni del Dipartimento di Economia, Finanza e Statistica
55/2008, Università di Perugia, Dipartimento Economia.
- PERUGINI, Cristiano, 2009. "Employment Intensity Of Growth In Italy. A Note Using Regional Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 9(1).
- Connaughton, John E. & Madsen, Ronald A., 2012. "U.S. State and Regional Economic Impact of the 2008/2009 Recession," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 42(3).
- Binet Marie-estelle & Francois Facchini, 2013.
"Okun's law in the french regions: a cross-regional comparison,"
AccessEcon, vol. 33(1), pages 420-433.
- François Facchini & Marie-Estelle Binet, 2013. "Okun’s law in the French regions: a cross-regional comparison," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01286731, HAL.
- Marie-Estelle Binet & François Facchini, 2012. "Okun’S Law In The French Regions: A Cross-Regional Comparison," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201222, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
- Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 86-100.
- Moosa, Imad A., 1997. "A Cross-Country Comparison of Okun's Coefficient," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 335-356, June.
- J. Barkley Rosser, 2009. "Introduction," Chapters, in: Handbook of Research on Complexity, chapter 1 Edward Elgar Publishing.
- Juan Carlos Cuestas & Luis A. Gil-Alana, 2011. "Unemployment hysteresis, structural changes, non-linearities and fractional integration in European transition economies," Working Papers 2011005, The University of Sheffield, Department of Economics, revised Feb 2011.
- Villaverde, José & Maza, Adolfo, 2009. "The robustness of Okun's law in Spain, 1980-2004: Regional evidence," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 289-297.
When requesting a correction, please mention this item's handle: RePEc:cwm:wpaper:140. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daifeng He)or (Alfredo Pereira)
If references are entirely missing, you can add them using this form.