Okun's Law: Empirical Evidence from Pakistan (1981-2005)
Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
The main objective of this research paper is to find the association between unemployment rate and GDP growth which is presented empirically by Arthur Okun’s in early 1960s. For this purpose I have used annual time series data during the period 1981-2005 of Pakistan. I applied difference version of Okun’s law which is more appropriate to access results directly from empirical data. In order to find long run relation between the variables I used Engle-Granger cointegration technique and Error Correction Mechanism (ECM) to find the short term behavior of GDP growth to its long run value. This paper verifies negative relationship between unemployment rate and GDP growth and both variables have long run relation with each other. Moreover GDP growth will adjust more quickly towards equilibrium in the long run.
Place, publisher, year, edition, pages
2012. , 39 p.
Error Correction Mechanism (ECM), Engle-Granger, Cointegration, Gross Domestic Product (GDP), unemployment rate, difference version, Okun’s Law.
IdentifiersURN: urn:nbn:se:sh:diva-16168OAI: oai:DiVA.org:sh-16168DiVA: diva2:525872
Subject / course
2012-04-27, ME111, Södertörns högskola Box 4101, 141 04 Huddinge, Stockholm, 15:28 (English)
UppsokSocial and Behavioural Science, Law
Lin, Xiang, Högskolelektor
Blomskog, Stig, Högskolelektor