Asymmetry in the Unemployment-Output Relationship Over the Business Cycle: Evidence from Transition Economies
Emrah Ismail Cevik, Sel Dibooglu, Salih Barisik
article (Uluslararası, Hakemli) | Yazar(lar): Emrah Ismail Cevik, Sel Dibooglu, Salih Barisik | Yıl: 2013 | Dergi/Kurum: COMPARATIVE ECONOMIC STUDIES | İndeks: WOS.ESCI | DOI: 10.1057/ces.2013.7 | Anahtar Kelimeler: Okun's law, asymmetric adjustment, Markov regime switching, transition economies, business cycles — Özet
This study examines the presence of asymmetry in Okun's law for nine transition economies by means of a Markov regime-switching model. We examine the relationship between unemployment and real GDP to ascertain whether such changes are substantially different in downswing versus upswing regimes. The nonlinear model outperforms the linear model in all transition economies in the sample except for Slovenia. There is evidence that the Okun coefficients vary across regimes and countries. In most countries, cyclical unemployment is more sensitive to cyclical output in downswing regimzes than upswing regimes. We also find recoveries entail poor job growth in most transition economies.