Okun's Law - a meta analysis

Perman, Roger and Stephen, Gaetan and Tavéra, Christophe (2015) Okun's Law - a meta analysis. Manchester School, 83 (1). pp. 101-126. ISSN 1467-9957 (https://doi.org/10.1111/manc.12057)

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Abstract

his paper seeks to identify whether there is a representative empirical Okun's law coefficient (OLC) and to measure its size. We carry out a meta-regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both subsamples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both subsamples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are −0.25 for the unemployment subsample and −0.61 for the output subsample; with a multivariate MRA methodology, the estimated true effects are −0.40 and −1.02 for the unemployment and the output subsamples respectively.

ORCID iDs

Perman, Roger ORCID logoORCID: https://orcid.org/0000-0002-6862-7462, Stephen, Gaetan and Tavéra, Christophe;
  • Item type:Article
    ID code:48054
    Dates:
    Date
    Event
    January 2015
    Published
    27 March 2014
    Published Online
    Notes:This is the peer reviewed version of the following article: Perman, Roger.,Stephan, Gaetan., Tavéra, Christophe. (2015), Okun's Law—a Meta-analysis., Manchester School, 83 (1), p101-126, which has been published in final form at 10.1111/manc.12057. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:13 May 2014 11:46
    Last modified:11 Nov 2024 10:41
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/48054
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