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Okun in the Euro: New Evidence from Structural Okun Law’s Estimates for the Euro Area, 1979-2019

Year: 2024

Type: article

Abstract: This paper provides new estimates of Okun’s unemployment-output relationship in euro area countries between 1979 and 2019. We find our structural estimates are stable but substantially lower than the reduced-form estimates that tend to characterise the literature and that the responsiveness of output to unemployment is driven by idiosyncratic factors in both euro core and periphery countries. The results are robust to conditioning on wage bargaining institutional set-ups and, yet, in the euro periphery, we find product market regulation as playing a major role in explaining the significance of Okun’s law estimates across countries.

Source: IMF Working Paper

DOI: 10.5089/9798400285714.001

Authors: Nauro Campos, Corrado Macchiarelli, Fotios Mitropoulos

Institutions: International Monetary Fund, University College London, National Institute of Economic and Social Research, Democritus University of Thrace

Language: English

Topic: Unemployment and Economic Growth

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: diamond

OpenAlex ID: W4401481530

FWCI: 2.148

Cites: 30

Cited by: 6

Related to: 10