scholarly journals The Impact of GDP and Its Expenditure Components on Unemployment Within BRICS Countries: Evidence of Okun’s Law From Aggregate and Disaggregated Approaches

SAGE Open ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 215824402110234
Author(s):  
Shabir Mohsin Hashmi ◽  
Ali Gul Khushik ◽  
Muhammad Akram Gilal ◽  
Zhao Yongliang
Keyword(s):  
Unemployment Rate ◽  
Global Financial Crisis ◽  
Government Expenditures ◽  
Okun’S Law ◽  
Entire Sample ◽  
Okun's Law ◽  
Econometric Methods ◽  
Brics Countries ◽  
Disaggregated Data ◽  
The Impact

This article examines the responsiveness of changes in the unemployment rate to changes in output for Brazil, Russia, India, China, and South Africa (BRICS) using aggregate and disaggregated data from 1991 to 2018. We also split the entire sample period into two subsamples (from 1991 to 2008 and 2009 to 2018) to see the responsiveness of changes in the unemployment rate to changes in the GDP in pre and post global financial crisis period of 2007–2008. Three different econometric methods were employed for conducting the analysis. Results obtained from aggregated and disaggregated data for the entire sample and two subsamples confirm the validity of the Okun law for BRICS. The postcrisis period Okun’s law estimates are larger than those from the full sample and precrisis period. Disaggregated data results show private consumption is the main determinant of the unemployment rate and its estimate is negative and significant. Along with consumption expenditures, other variables that have relevancy in determining changes in the unemployment rate are government expenditures, exports, and imports. Based on aggregated and disaggregated data results, it is recommended that the relevant authorities must focus sustainable economic growth for reducing unemployment rate in the country. Particularly, they must incentivize consumption and government expenditures, boost exports, and curtail imports for reducing the unemployment rate.

scholarly journals The Output Gap and Youth Unemployment: An Analysis Based on Okun’s Law

Economies ◽  
2019 ◽  
Vol 7 (4) ◽  
pp. 108
Author(s):  
Mindaugas Butkus ◽  
Janina Seputiene
Keyword(s):  
Unemployment Rate ◽  
Youth Unemployment ◽  
Okun’S Law ◽  
Equilibrium Unemployment ◽  
Age And Gender ◽  
Okun's Law ◽  
And Gender ◽  
The Impact ◽  
Gender Specific ◽  
Potential Level

The impact of economic fluctuations on the total unemployment rate is widely studied, however, with respect to age- and gender-specific unemployment, this relationship is not so well examined. We apply the gap version of Okun’s law, aiming to estimate youth unemployment rate sensitivity to output deviations from its potential level. Additionally, we aim to compare whether men or women have a higher equilibrium unemployment rate when output is at the potential level. Contrary to most studies on age- and gender-specific Okun’s coefficients, which assume that the effect of output on unemployment is homogenous, we allow a different effect to occur, depending on the output gap’s sign (positive/negative). The focus of the analysis is on 28 EU countries over the period of 2000–2018. The model is estimated by least squares dummy variable estimator (LSDV), using Prais–Winsten standard errors. We did not find evidence that higher equilibrium unemployment rates are more typical for men or for women. The estimates clearly show the equilibrium level of youth unemployment to be well above that of total unemployment, and this conclusion holds for both genders. We assess greater youth unemployment sensitivity to negative output shock, rather than to positive output shock, but when we take confidence intervals into consideration, this conclusion becomes less obvious.

scholarly journals UNEMPLOYMENT AND ECONOMIC GROWTH IN NIGERIA: DOES OKUN’S LAW MATTERS?

10.23856/3203 ◽  
2019 ◽  
Vol 32 (1) ◽  
pp. 26-37
Author(s):  
Oluwaseyi Adedayo Adelowokan ◽  
Adeteji Olusegun Оkutimiren
Keyword(s):  
Economic Growth ◽  
Population Growth ◽  
Unemployment Rate ◽  
Government Expenditure ◽  
Output Growth ◽  
Sustainable Growth ◽  
Okun’S Law ◽  
Okun's Law ◽  
The Government ◽  
The Impact

The situation in Nigeria is rapid population growth with high level of unemployment rate. The theoretical proposition of the Okun’s law suggests an indirect relationship existing between unemployment and output growth. This study tests the validity of Okun’s law by examining the impact of youth employment generation on sustainable growth in the Nigerian economy. We modeled real gross domestic product against unemployment rate, population growth, labour and government expenditure between 1986 and 2017. The empirical findings show that there is short- and long- run relationship existing between unemployment rate, population growth and output growth in Nigeria. Hence, study recommends that the activities by the government in promoting economic growth in the country should be geared towards promoting employment for the people in other sector.

Labour Markets in the Global Financial Crisis: The Good, the Bad and the Ugly

2014 ◽  
Vol 228 ◽  
pp. R58-R64 ◽  
Author(s):  
Mary C. Daly ◽  
John G. Fernald ◽  
Òscar Jordà ◽  
Fernanda Nechio
Keyword(s):  
Financial Crisis ◽  
Labour Market ◽  
Global Financial Crisis ◽  
Technological Changes ◽  
Okun’S Law ◽  
Short Term ◽  
Demand Shock ◽  
Okun's Law ◽  
Global Demand ◽  
The Global Financial Crisis

This note examines labour market performance across countries through the lens of Okun's Law. We find that after the 1970s but prior to the global financial crisis of the 2000s, the Okun's Law relationship between output and unemployment became more homogenous across countries. These changes presumably reflected institutional and technological changes. But, at least in the short term, the global financial crisis undid much of this convergence, in part because the affected countries adopted different labour market policies in response to the global demand shock.

New Estimates of Prewar Gross National Product and Unemployment

1986 ◽  
Vol 46 (2) ◽  
pp. 341-352 ◽  
Author(s):  
Christina Romer
Keyword(s):  
United States ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Serial Correlation ◽  
Gross National Product ◽  
The United States ◽  
National Product ◽  
Okun’S Law ◽  
Okun's Law ◽  
The Business Cycle

The paper examines in detail revised estimates of unemployment and gross national product for the United States before 1929. It first discusses the nature of the revisions to each series and contrasts the assumptions underlying the new data with those underlying the Kuznets GNP series and the Lebergott unemployment rate series. It then examines the business cycle properties of the new prewar estimates. In analyzes the volatility and serial correlation properities of the new macroeconomic series and investigates the Okun's Law relationship between unemployment and GNP, concluding with an evaluation of the assumptions underlying the old and new data.

scholarly journals Okun's law and assessment of stimulus to the economy of Bosnia and Herzegovina

2021 ◽  
Vol 13 (2) ◽  
pp. 29-41
Author(s):  
Jasmin Halebić
Keyword(s):  
Bosnia And Herzegovina ◽  
Unemployment Rate ◽  
Financial Support ◽  
Economic Consequences ◽  
Okun’S Law ◽  
Negative Effects ◽  
Simple Arithmetic ◽  
Okun's Law ◽  
Growth And Change ◽  
Autumn And Winter

The effects of coronavirus pandemics are omnipresent in the national economy of Bosnia and Herzegovina. Output and unemployment are probably the most important variables for measuring the negative effects of the pandemics from a macroeconomic perspective. Different organizations, both national and international, have announced their autumn and winter prognoses of these variables for 2020. None of them are optimistic. The Bosnian economy is in the worst situation in the last two decades. International Monetary Fund approved US$ 361 million in urgent support to B&H in 2020 to alleviate the COVID-19 negative economic consequences. This paper aims to investigate the potential economic impact of that financial support with the application of simple arithmetic. In the paper, Okun's law is used as a methodological framework to assessing the effects of the IMF's rapid financial instrument. The relationship between the real economic growth and change in the unemployment rate is estimated for the B&H economy. Findings of the paper show that the IMF financial support effect amounts to about 3.7% of GDP in B&H. Effects on the unemployment rate are estimated to 2.3 percentage points less than what it would otherwise have been. Since the early estimations of the GDP in B&H indicated a deep recession in 2020 this financial support proved to be an insufficient stimulus to the B&H economy. Decision-makers in the country should be aware of their responsibility for providing larger stimulus packages to avoid bad economic and social outcomes soon.

Is there a Core of Macroeconomics that Euro Area Forecasters Believe In?

2012 ◽  
Vol 13 (1) ◽  
pp. 103-115 ◽  
Author(s):  
Christian Pierdzioch ◽  
Georg Stadtmann ◽  
Jan-Christoph Rülke
Keyword(s):  
Growth Rate ◽  
Unemployment Rate ◽  
Euro Area ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Practical Relevance ◽  
Okun’S Law ◽  
Macroeconomic Theory ◽  
Quantity Theory ◽  
Okun's Law

Abstract The quantity theory of money, Okun’s law, and the Phillips curve are cornerstones of macroeconomic theory. But are they also of practical relevance? Using survey data for the euro area, we found that professional economists’ forecasts are consistent with a version of the quantity theory in which forecasts of the growth rate of money supply correlate in a proportional way with forecasts of the inflation rate. We also found that forecasts of changes in the unemployment rate and forecasts of the growth rate of real output are consistent with Okun’s law. Evidence of a systematic link between forecasts of the inflation rate and forecasts of the unemployment rate, however, is not strong.

scholarly journals The impact of macroeconomic and structural factors on the unemployment of young women and men

2021 ◽  
Author(s):  
Beata Bal-Domańska
Keyword(s):  
Labor Market ◽  
Unemployment Rate ◽  
Youth Unemployment ◽  
Structural Factors ◽  
Knowledge Based ◽  
Econometric Methods ◽  
Knowledge Based Economy ◽  
Econometric Analyses ◽  
Macroeconomic Determinants ◽  
The Impact

AbstractThe presented article follows the research mainstream of econometric analyses focused on the assessment of correlations between youth unemployment rate and market and macroeconomic determinants, including economic growth and productivity of the economy, its structure in terms of NACE Rev.2 sections as well as the labor market tools. The research addresses 28 European Union (EU) countries. The analysis period covers the years 2008–2018. The econometric methods dedicated to panel data were used. The research results confirm the importance of the general economic condition as well as the development of knowledge-based economy for the improvement of the youth situation in the labor market. With regard to the economy structure, the development of manufacturing section importance turned out to be a major factor in female youth unemployment rate reduction. The growing importance of the construction sector translated into a decline in the unemployment rate among young men.

scholarly journals Disaggregating Okun’s Law: A Case-Study for Macedonia

2019 ◽  
Vol 8 (1) ◽  
pp. 183-207
Author(s):  
Danica Unevska Andonova ◽  
Magdalena Petrovska
Keyword(s):  
Global Financial Crisis ◽  
Debt Crisis ◽  
Domestic Demand ◽  
Structural Reforms ◽  
Okun’S Law ◽  
Okun's Law ◽  
The Global Financial Crisis ◽  
The Relationship ◽  
Intensive Growth

Abstract Okun’s law is one of the most widely-known stylized facts in the macroeconomic literature and policy. In this paper we study several aspects of Okun’s law in Macedonia between 2004 and 2016. Aggregate indicators show a link between output and unemployment that is in line with other emerging markets and regional peers. We also find that the relationship has been somewhat weaker in recent years, which might be related to the recent job-intensive growth in the wake of structural reforms after the global financial crisis and particularly the subsequent European debt crisis. When investigating whether various expenditure components of GDP may cause different unemployment reactions, an important issue that has not been sufficiently addressed in the literature, we find that domestic demand has a stronger effect. We also provide several robustness checks to our main findings, and illustrate how they might be used to improve forecasting.

scholarly journals The Validity of Okun’s Law, Case of Jordan

2017 ◽  
Vol 13 (28) ◽  
pp. 470
Author(s):  
Saleh Al-hosban ◽  
Mohmmad Edienat
Keyword(s):  
Economic Growth ◽  
Unemployment Rate ◽  
Negative Relationship ◽  
Economic Policies ◽  
Okun’S Law ◽  
Okun's Law ◽  
Real Gdp ◽  
Economic Methods ◽  
Econometric Tests ◽  
The Relationship

The main aim of this study is to empirically examine ,investigate and test the relationship between unemployment rate and economic growth within Jordanian economy over the period of time (1982-2016), in order to examine the validity of Okun’s law, which suggests a negative relationship between unemployment rate and economic growth, several economic methods are employed by using descriptive statistics, as well as some econometric tests, in order to analyze the variables under study . The empirical results of this study show a negative relationship between unemployment and GDP in the period 1982-2016 in Jordanian economy, which is consistent with Okun’s law. In other word, this study offered an additional empirical evidence to confirm the validity of the Okun’s law in the case of Jordan over the period 1982-2016.So any attempt to increase economic growth through some economic policies such as expansion in spending would reduce unemployment rate, where the Okun’s coefficient of GDP with respect to unemployment rate is- 0.004, such that an increase of 100 million Jordanian Dinars in the Real GDP will cause 40% decrease in the unemployment rate, which is about half percent in unemployment rate in the next. The findings of this thesis may help economists and policymakers when adapting policies in order to adjust unemployment level in the economy.

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