Cross-country Evidence on a Nonlinear Okun Curve
This paper presents cross-country evidence on a nonlinear Okun curve. The analysis is based on a simple error-correction model of unemployment. The model is estimated using a threshold model estimator. Evidence from 20 OECD countries for 1960-1997 gives support for the existence of nonlinearities in terms of the output growth effects. Output growth has a strong effect on unemployment when unemployment is low and output is high, and vice versa. Thus, in bad times, the effect of output growth on unemployment can be close to zero. In addition to this nonlinear output effect, also the population growth effect appears to be of similar type. The above mentioned basic results turn out to be robust in terms of estimation method (single equation vs pooled data estimation) and specification of the threshold variable.
|Date of creation:||31 Dec 2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +358 295 519 400
Fax: +358 295 519 599
Web page: http://www.vatt.fi/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Richard Harris & Brian Silverstone, 2000. "Asymmetric Adjustment of Unemployment and Output in New Zealand: Rediscovering Okun's Law," Working Papers in Economics 00/02, University of Waikato, Department of Economics.
- 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.
When requesting a correction, please mention this item's handle: RePEc:fer:dpaper:239. 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: (Anita Niskanen)
If references are entirely missing, you can add them using this form.