Regional growth and unemployment in the medium run : asymmetric cointegrated Okun's Law for UK regions

Palombi, Silvia and Perman, Roger and Tavéra, Christophe (2015) Regional growth and unemployment in the medium run : asymmetric cointegrated Okun's Law for UK regions. Applied Economics, 47 (57). pp. 6228-6238. ISSN 0003-6846 (https://doi.org/10.1080/00036846.2015.1068922)

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Abstract

This article tests for the presence of a medium-run asymmetric Okun's Law relationship between regional output and regional unemployment rate in UK regions. The test is performed with a panel data version of the hidden cointegration technique suggested by Granger and Yoon. A novelty of the article is to combine the method of hidden cointegration with a panel data method of removing cross-sectional dependence. The medium-run Okun relationship for regions in the UK appears to confirmresults found elsewhere in the literature on countries as a whole, although the coefficients tend to be smaller.