Regional differences in the Okun's Relationship: New Evidence for Spain (1980-2015)

This article provides new empirical evidence on the relationship between the unemployment rate and the output growth in Spain at the regional level. The «gap version» with the output growth on the left-hand side of the equation is our benchmark model. Our empirical results show that all coefficients...

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Bibliographic Details
Published in:Investigaciones regionales 2018-09 (41), p.137-165
Main Authors: Bande, Roberto, Martín-Román, Ángel
Format: Article
Language:English
Subjects:
Business cycles
Econometrics
Economic conditions
Economic policy
Employment
GDP
Gross Domestic Product
Growth rate
Labor market
Recessions
Regions
Studies
Unemployment
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Summary:This article provides new empirical evidence on the relationship between the unemployment rate and the output growth in Spain at the regional level. The «gap version» with the output growth on the left-hand side of the equation is our benchmark model. Our empirical results show that all coefficients are significant and show the expected negative sign. Significant regional differences in the Okun's relationship, both for the short run and the long run, are found. These results are robust to two different specifications for the gaps: the HP filter and the QT procedure. In the final part of the article, it is also found that the OLS and the GMM estimates for panel data exhibit a similar pattern and that there is a clear asymmetry in the Okun's relationship in booming and recession phases of the Spanish business cycle.
ISSN:1695-7253
2340-2717