Author(s):
Andrade, João Sousa 
Date: 2007
Persistent ID: http://hdl.handle.net/10316/11744
Origin: Estudo Geral - Universidade de Coimbra
Subject(s): Okun Law; Cycles; Participation rate; Stability and Asymmetry
Document details
Uma Aplicação da Lei de Okun em Portugal
Description
We know from experience that weak economic growth increases the unemployment rate. In 1962 Okun proposed to measure potential output in terms of unemployment gap. From this relation a direct link between increase in unemployment and output growth was deduced, known as the Okun Law. This Law is one of the pillars of empirical macroeconomics. One of the problems of this Law is the iteration between the variables involved and the non-stationarity of these variables. As a consequence we must be careful with the stability and the possible asymmetry of Okun’s Law. We apply these ideas to the Portuguese economy in order to obtain an estimated Okun Law. We can conclude by the temporal stability of a dynamic formulation of the Law, although we also conclude by the presence of an asymmetric behaviour of the Law.
We know from experience that weak economic growth increases the unemployment rate. In 1962 Okun proposed to measure potential output in terms of unemployment gap. From this relation a direct link between increase in unemployment and output growth was deduced, known as the Okun Law. This Law is one of the pillars of empirical macroeconomics. One of the problems of this Law is the iteration between the variables involved and the non-stationarity of these variables. As a consequence we must be careful with the stability and the possible asymmetry of Okun’s Law. We apply these ideas to the Portuguese economy in order to obtain an estimated Okun Law. We can conclude by the temporal stability of a dynamic formulation of the Law, although we also conclude by the presence of an asymmetric behaviour of the Law.
Document Type
Research paper
Language Portuguese
Language Portuguese
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