Test of Okun’s Law in Some Asian Countries Co-Integration Approach

Lal, Irfan; Mohammad, Sulaiman D.; Hussain, Adnan; Jalil, Anwar

doi:10.2139/ssrn.1562602

Cited by 41 publications

(34 citation statements)

References 18 publications

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“…Though the long run coefficient is just 0.7 % higher than the hypothesised, the positive sign invalidates Okun's claim. The findings are in accordance with Lal et al (2010) and likewise Kreishan (2011) and other researches on the subject. However, the ECM is negative as expected implying that for the system of unemployment rates in SA to be reinstated back to normal, a short run adjustment rate of about 12.8 % per quarter may be applied.…”

Section: Resultssupporting

confidence: 92%

An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

Moroke

Leballo²,

Mello³

2014

MJSS

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Section: Resultssupporting

confidence: 92%

An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

Moroke

Leballo²,

Mello³

2014

MJSS

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“…Lal et al [19] estimated and tested the Okun's law in some Asian countries using data from 1980 to 2006. Employing the Engle granger cointegration test and the error correction model, the study found the okun's law not to hold for some Asian countries.…”

Section: Andrei Andmentioning

confidence: 99%

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

Eshun

2020

JEMT

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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.

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“…Whereas the country's labour force grew at an average rate of 0.3% every year, the GDP growth rate at 1984 factor cost grew at 3.5% over a period of 33 years. In the same vein, the Okun's coefficient was studied in order to validate the law in some Asian countries using the annual time series data between 1980 and 2006 (Lal, 2010). In addition, the research employed the Error Correction Mechanism (ECM) evaluate the dynamics in the short run.…”

Section: Literature and Empirical Reviewsmentioning

confidence: 99%

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

Onakoya

Seyingbo

2020

JEBS

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Okun’s law in its original form was predicated on the experience in the United States of America. Some methodological refinements have been added based on studies conducted in other climes with varied results. This research investigated the applicability of this law in Nigeria, South Africa and the United States of America. The study conducted a comparative analysis of three of the versions of the law. The research employed Ordinary Least Squares method having validated it’s appropriateness with Dickey-Fuller and Philips-Perron tests. The demonstrated superiority of the dynamic version over the difference version was manifest in all the countries. The result also showed that the dynamic version of the law was applicable in the three nations while the difference version showed the lack of linkage between economic growth and unemployment only in Nigeria. Deployment of employment creative employment schemes, labour market reform and economic restructuring are recommended in the Nigerian case. The policy makers on South Africa and USA are enjoined to pursue growth- inducing policies.

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Test of Okun’s Law in Some Asian Countries Co-Integration Approach

Cited by 41 publications

References 18 publications

An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

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

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

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