| ID | 193049 |
| Title Proper | Is Okun’s law valid in Bangladesh? a time series analysis |
| Language | ENG |
| Author | Sakib, Arfanul Ibna Mustafa |
| Summary / Abstract (Note) | Using the data from 1991 to 2019, this study attempts to verify Okun’s law by utilizing both ‘The difference and the dynamic versions’ of Okun’s law in Bangladesh and tries to find the value of Okun’s coefficient. The autoregressive-distribution lag (ARDL) bounds test is applied to determine the existence of a long-term relationship between the variables, and then the ordinary least squares (OLS) approach is used to estimate the findings. The findings show that Okun’s coefficient is –0.058 for the difference version of Okun’s law, which is statistically insignificant. In addition, for the dynamic version of Okun’s law, findings show that the effect of the ‘immediate past economic growth rate’ on ‘current change in the unemployment rate’ is 0.15, and it is statistically insignificant too. However, the effect of the ‘current economic growth rate’ on ‘current change in the unemployment rate’ is –0.22, and it is statistically significant at 10% significance level. In both versions of Okun’s law, R2 values, F-statistic and cumulative sum of squares show the instability of the models. Due to statistically insignificant coefficients and model instability, it can be concluded that Okun’s law is invalid in Bangladesh. |
| `In' analytical Note | South Asia Economic Journal Vol. 24, No.2; Sept 2023: p.137–152 |
| Journal Source | South Asia Economic Journal 2023-12 24, 2 |
| Key Words | Bangladesh ; ARDL Bounds Test ; OLS ; Okun's Law ; Difference Version ; Dynamic Version |