Validity and Asymmetry of Okun’s Law: Evidence from Asian Economies

2021 ◽  
Vol 3 (2) ◽  
pp. 143-156
Author(s):  
Farhat Rasul ◽  
Nabila Asghar ◽  
Hafeez ur Rehman
Keyword(s):  
Economic Growth ◽  
Labor Markets ◽  
Significant Relationship ◽  
Sample Period ◽  
Okun’S Law ◽  
Structural Unemployment ◽  
Middle Income ◽  
Okun's Law ◽  
Asian Economies ◽  
Relationship Of

This study investigates the validity and asymmetry of output-unemployment relationship for three groups: high income, upper middle income and lower middle income Asian Economies over the period of 1980-2018. This study investigates whether the behavior of labor markets is rigid or flexible in these economies over the sample period. By using the Hodrick and Prescott filter, the study finds a statistically significant relationship between cyclical output and cyclical unemployment; hence provides the evidence of the existence of Okun’s Law with more sensitive results for the lower middle economies as compared to other groups of countries. The study also discovers the evidence of asymmetric relationship of output-unemployment during the recessionary and expansionary period of economic growth. Although the value of coefficient varies due to asymmetry but the variation is found to be small across the three groups of the countries. The study concludes that sample economies have rigid labor markets indicating the persistence of structural unemployment.

scholarly journals Economic Growth and Unemployment Issues in Ten (10) Selected West African Countries: A Panel Data Analysis

2020 ◽  
pp. 1-12
Author(s):  
Joseph Eshun
Keyword(s):  
Economic Growth ◽  
West Africa ◽  
Panel Data Analysis ◽  
Fixed Effect ◽  
Okun’S Law ◽  
African Countries ◽  
Okun's Law ◽  
Unit Increase ◽  
Effect Regression ◽  
Variable Bias

The economic growth of nations continue to be one of the main issues that economists have been interested in analyzing. In effect, several theories have emerged to explain the growth of nations including the Okun’s law which tests the relationship between economic growth and unemployment. Using the World Bank Dataset, the study tested the validity of Okun's Law in West Africa by employing fixed effect regressions to control for inconsistencies of the OLS estimates due to omitted variable bias. The random and time-fixed effect regressions confirm the validity of the Okun's Law in West Africa. The time-fixed effect regression shows that, economic growth will decline by 0.311 annually for every unit increase in the rate of unemployment. Time variant effects such as changes in policy provides a stronger case for the effect of unemployment rate volatility on the growth of these economies. It is therefore recommended that, various stakeholders adopt efficient fiscal and monetary policies aimed at lowering the rate of unemployment thereby expanding economic growth. One of such policies could be the reduction of the high corporate tax rates in the region that is bedeviling African countries by preventing industries and businesses from being built.

scholarly journals Financial Inclusion between Financial Innovation and Economic Growth A Study of Lower Middle Income Economies

2021 ◽  
Vol 7 (4) ◽  
Author(s):  
Hina Affandi ◽  
Qaisar Ali Malik
Keyword(s):  
Economic Growth ◽  
Financial Innovation ◽  
Income Group ◽  
Financial Inclusion ◽  
Sample Period ◽  
Middle Income ◽  
Underserved Community ◽  
Middle Income Group ◽  
The Relationship

Financial inclusion is a key concern that has achieved much impulsion in the last two decades internationally. It has the scope of reporting of financial scheme and institutions to the underserved community in the economy. This study examined the effect of financial innovation on economic growth with the mediation of financial inclusion. To address the relationship researchers in this study have used measures from a dataset of low and lower middle income group economies over a sample period from 2010-2017. The results of this study shows that financial innovation creates opportunities for financially excluded segment of the society which results in financial inclusion that leads to economic growth of low and lower middle economies. Therefore, financial innovation is a way for creation of financial inclusion in low and lower middle economies. 

scholarly journals Comparative Analysis of Health and Economic Growth Nexus: A Case Study of Bangladesh, India and Pakistan

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
Muska Nazir, Dr. Ahmed Farhan Saeed, Dr. Sanam Wagma Khattak
Keyword(s):  
Economic Growth ◽  
Comparative Analysis ◽  
Positive Relationship ◽  
Health Indicators ◽  
Efficient Utilization ◽  
Middle Income ◽  
Middle Income Countries ◽  
Key Factor ◽  
Relationship Of

Health is one of the key factor that determines the growth of an economy. It is the improved health of the labor that can translate into increased output levels, higher level of productivity and efficient utilization of resources. For the study, Pooled OLS regression over the period from 1980-2017 is applied on panel data to find the results of health and economic growth nexus for three lower middle income countries that are Bangladesh, India and Pakistan. For Pakistan, Bangladesh and India, their statistics provides further support to existing literature showing a significant and positive relationship of health with economic growth. Comparing their results, it is found that India’s better health facilities are contributing more towards economic growth as compared to Pakistan and Bangladesh. Therefore, their focus too should be on improvement of health indicators in order to achieve higher economic growth levels.

scholarly journals ANALISIS KURVA PHILLIPS DAN HUKUM OKUN DI INDONESIA TAHUN 1986-2016

1970 ◽  
Vol 15 (1) ◽  
Author(s):  
Prihartini Budi Astuti
Keyword(s):  
Economic Growth ◽  
Data Analysis ◽  
Correlation Coefficient ◽  
Phillips Curve ◽  
Negative Relationship ◽  
Economic Conditions ◽  
Okun’S Law ◽  
Legal Compliance ◽  
Okun's Law ◽  
Curve Theory

This study aims to determine the fit between Phillips Curve theory and Okun's law with the economic conditions that occurred in Indonesia in 1986-2016. This research is a descriptive quantitative research. Data used in the study is rate of economic growth, the unemployment rate and the inflation rate in Indonesia in 1986-2016. The data was taken from the website of Bank Indonesia and Badan Pusat Statistik. Quantitative analysis method used is correlation analysis. The analysis showed that there was no agreement between Phillips Curve theory and Okun's law with the economic conditions that occurred in Indonesia in 1986-2016. Phillip curves for compliance with the conditions of the Indonesian economy in 1986-2016, from data analysis obtained correlation coefficient of -0.16 with significance value of 0.931. From these figures, it can be concluded that there is a negative relationship but not significant between inflation and unemployment in Indonesia in 1986 - 2016. For Okun legal compliance with the conditions of the Indonesian economy in 1986 to 2016, from data analysis obtained correlation coefficient of - 0.110 with a significance value of 0,556. From these figures, it can be concluded that there is a negative relationship but not significant between economic growth and unemployment in Indonesia in 1986-2016

The Okun’s Law in the Regional Labour Markets in Poland

2017 ◽  
Vol 64 (1) ◽  
pp. 41-58
Author(s):  
Paweł Kliber
Keyword(s):  
Economic Growth ◽  
Labour Markets ◽  
Okun’S Law ◽  
Okun's Law ◽  
Common Shocks ◽  
Seemingly Unrelated Regressions ◽  
Regional Labour Markets ◽  
The Law ◽  
Random Shocks ◽  
Structure Research

In the article we attempt to analyse unemployment in regional labour markets in Poland. According to the well-known Okun’s Law changes in unemployment are associated with changes in economic growth. We have examined whether the law is valid in the Polish regional labour markets. We have calculated Okun’s coefficients in the regions of Poland provinces and then estimated these coefficient for the groups of regions using seemingly unrelated regressions (SUR) method, which allows to take account for common shocks. The results show that the later approach (grouping regions) gives a better estimate, because it includes the correlation of random shocks in different provinces. Following the work of Perman, Tavera (2005), the groups of regions with the same values of Okun’s coefficients are treated as “clubs” of provinces with similar macroeconomic structure. Research have revealed the existence of two such clubs: one composed of regions in the western part of the country and the second one consisting of provinces from the eastern part of the Poland.

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