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A Hybrid Time-Varying Parameter Bayesian VAR Analysis of Okun’s Law in the United States
Örebro University, Örebro University School of Business.ORCID iD: 0000-0003-0203-4688
Örebro University, Örebro University School of Business. National Institute of Economic Research, Sweden.ORCID iD: 0000-0002-4840-7649
2020 (English)In: Economics Letters, ISSN 0165-1765, E-ISSN 1873-7374, Vol. 197, article id 109622Article in journal (Refereed) Published
Abstract [en]

Employing quarterly data on GDP growth and the unemployment rate ranging from 1948Q3 to 2019Q4, we study the stability of Okun’s law in the United States. This is done by estimating hybrid time-varying Bayesian VAR models that allow for time-variation in none, one or both of the equations. Model comparison based on marginal likelihoods suggests that the relationship has not been stable. However, the amount of change in the dynamic relationship between the two variables is quantitatively very modest.

Place, publisher, year, edition, pages
Elsevier, 2020. Vol. 197, article id 109622
Keywords [en]
Unemployment, GDP growth, Bayesian VAR, Time-varying parameters, Model selection
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:oru:diva-86246DOI: 10.1016/j.econlet.2020.109622ISI: 000600839700006Scopus ID: 2-s2.0-85094218869OAI: oai:DiVA.org:oru-86246DiVA, id: diva2:1473605
Available from: 2020-10-06 Created: 2020-10-06 Last updated: 2021-01-20Bibliographically approved

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Karlsson, SuneÖsterholm, Pär

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