Okun's Law - a Meta Analysis

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Perman, Roger and Stephan, Gaetan and Tavéra, Christophe (2013) Okun's Law - a Meta Analysis. Discussion paper. University of Strathclyde, Glasgow.

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Abstract

This 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 sub-samples, 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 sub-samples. 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 sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.

ORCID iDs

Perman, Roger ORCID logoORCID: https://orcid.org/0000-0002-6862-7462, Stephan, Gaetan and Tavéra, Christophe;
  • Item type:Monograph(Discussion paper)
    ID code:68103
    Dates:
    Date
    Event
    4 July 2013
    Published
    Notes:Published as a paper within the Discussion Papers in Economics, No. 13-11 (2013)
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:29 May 2019 11:24
    Last modified:12 Dec 2024 01:50
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/68103
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