A revisited causality analysis of Okun’s Law: The case of Turkey
The relationship between the gross domestic product (GDP) and unemployment is analyzed with Okun’s Law. Different studies that assess whether the two variables affect one another are examined with regard to Turkey. In this study, the authors examined whether an increase in GDP causes unemployment to...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
General Association of Economists from Romania
2018-12-01
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| Series: | Theoretical and Applied Economics |
| Subjects: | |
| Online Access: |
http://store.ectap.ro/articole/1362.pdf
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| Summary: | The relationship between the gross domestic product (GDP) and unemployment is
analyzed with Okun’s Law. Different studies that assess whether the two variables affect one another
are examined with regard to Turkey. In this study, the authors examined whether an increase in
GDP causes unemployment to fall or not with the youth (15-24 years) unemployment rate, prime
working years (25-54) unemployment rate, and general (15-64) unemployment rate in Turkey. The
relationship between GDP and unemployment was investigated using the unrestricted VAR and
Hsiao’s Granger causality test, covering the period of 2006q2 to 2014q4. According to the causality
tests, the empirical results show a negative unidirectional and statistically significant causality
relationship from GDP to unemployment rates in the short term. Consequently, Okun’s Law is valid
for Turkey. |
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| ISSN: | 1841-8678 1844-0029 |