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- Title
Asymmetry in Okun's law.
- Authors
Silvapulle, Paramsothy; Moosa, Imad A.; Silvapulle, Mervyn J.
- Abstract
In this paper we support the proposition that the output-unemployment relationship as represented by Okun's law is asymmetric. Okun's coefficients are defined based on a dynamic model that allows for asymmetry in the relationship between cyclical output and unemployment. Using data from the United States for the post-war period, our results show that the short-run effects of positive cyclical output on cyclical unemployment are quantitatively different from those of negative ones, and the data are consistent with the proposition that cyclical unemployment is more sensitive to negative than to positive cyclical output. Several theoretical explanations of asymmetry rationalize the findings. JEL Classification: C13, C22, E32
- Subjects
UNITED States; PRODUCTION (Economic theory); UNEMPLOYMENT; BUSINESS cycles; UNITED States economy; EMPLOYMENT
- Publication
Canadian Journal of Economics, 2004, Vol 37, Issue 2, p353
- ISSN
0008-4085
- Publication type
Article
- DOI
10.1111/j.0008-4085.2004.00006.x