Okun's Law - a Meta Analysis

Roger Perman, Gaetan Stephan, Christophe Tavéra

Research output: Working paperDiscussion paper

Abstract

This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.
Original languageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-29
Number of pages30
Volume13
Publication statusPublished - 2013

Fingerprint

Okun's law
Meta-analysis
Unemployment
Coefficients
Publication bias
Empirical results
Methodology
Meta-regression analysis

Keywords

  • okun's law coefficient
  • mra approach
  • unemployment

Cite this

Perman, R., Stephan, G., & Tavéra , C. (2013). Okun's Law - a Meta Analysis. (11 ed.) (pp. 1-29). Glasgow: University of Strathclyde.
Perman, Roger ; Stephan, Gaetan ; Tavéra , Christophe. / Okun's Law - a Meta Analysis. 11. ed. Glasgow : University of Strathclyde, 2013. pp. 1-29
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abstract = "This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.",
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Perman, R, Stephan, G & Tavéra , C 2013 'Okun's Law - a Meta Analysis' 11 edn, University of Strathclyde, Glasgow, pp. 1-29.

Okun's Law - a Meta Analysis. / Perman, Roger; Stephan, Gaetan ; Tavéra , Christophe.

11. ed. Glasgow : University of Strathclyde, 2013. p. 1-29.

Research output: Working paperDiscussion paper

TY - UNPB

T1 - Okun's Law - a Meta Analysis

AU - Perman, Roger

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AU - Tavéra , Christophe

N1 - Published as a paper within the Discussion Papers in Economics, No. 13-11 (2013)

PY - 2013

Y1 - 2013

N2 - This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.

AB - This paper seeks to identify whether there is a representative empirical Okun’s Law coefficient (OLC) and to measure its size. We carry out a meta regression analysis on a sample of 269 estimates of the OLC to uncover reasons for differences in empirical results and to estimate the ‘true’ OLC. On statistical (and other) grounds, we find it appropriate to investigate two separate subsamples, using respectively (some measure of) unemployment or output as dependent variable. Our results can be summarized as follows. First, there is evidence of type II publication bias in both sub-samples, but a type I bias is present only among the papers using some measure of unemployment as the dependent variable. Second, after correction for publication bias, authentic and statistically significant OLC effects are present in both sub-samples. Third, bias-corrected estimated true OLCs are significantly lower (in absolute value) with models using some measure of unemployment as the dependent variable. Using a bivariate MRA approach, the estimated true effects are -0.25 for the unemployment sub-sample and -0.61 for the output-sub sample; with a multivariate MRA methodology, the estimated true effects are -0.40 and -1.02 for the unemployment and the output-sub samples respectively.

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BT - Okun's Law - a Meta Analysis

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Perman R, Stephan G, Tavéra C. Okun's Law - a Meta Analysis. 11 ed. Glasgow: University of Strathclyde. 2013, p. 1-29.