Subtopic Deep Dive

Structural Stability of Okun's Law
Research Guide

What is Structural Stability of Okun's Law?

Structural Stability of Okun's Law examines time-series breaks in the unemployment-output relationship using tests like Chow and rolling regressions amid policy shifts or crises.

Researchers apply time-series techniques to annual data from 1970-2008 to test Okun's Law stability in Jordan (Kreishan, 2011, 131 citations). Studies assess if Great Recession altered the relationship across business cycles (Owyang and Sekhposyan, 2012, 108 citations) and twenty advanced economies since 1980 (Ball et al., 2013, 108 citations). Over 10 listed papers since 2011 use ARDL bounds testing and panel data for cross-country analysis.

Curated Papers

Key Challenges

Why It Matters

Stability tests determine if Okun coefficients hold post-Great Recession, guiding fiscal multipliers in policy design (Owyang and Sekhposyan, 2012; Ball et al., 2013). Cross-country variations inform why unemployment rose more in some nations during crises, aiding IMF employment-intensity policies (Cazes et al., 2013; Furceri et al., 2012). In emerging markets like Nigeria and South Africa, ARDL tests reveal oil price roles and long-run elasticities for growth strategies (Abu, 2017; Makaringe, 2018).

Key Research Challenges

Detecting Structural Breaks

Chow tests identify policy-induced shifts, but multiple breaks complicate specification (Owyang and Sekhposyan, 2012). Rolling regressions reveal time-varying parameters, yet sample size limits precision in short crises (Ball et al., 2013).

Cross-Country Heterogeneity

Okun coefficients differ by crisis response and labor markets, requiring panel methods (Cazes et al., 2013). Policy effects on elasticities vary across 167 countries (Furceri et al., 2012).

Data Frequency Limitations

Annual data from 1970-2008 misses intra-year dynamics in ARDL models (Kreishan, 2011; Abu, 2017). Quarterly South African series improve estimates but face stationarity issues (Makaringe, 2018).

Essential Papers

Economic Growth and Unemployment: An Empirical Analysis

Kreishan · 2011 · Journal of Social Sciences · 131 citations

Problem statement: This research investigates the relationship between unemployment and economic growth in Jordan through the implementation of Okun’s law. Approach: Using annual data covering the ...

Okun’s Law over the Business Cycle: Was the Great Recession All That Different?

Michael T. Owyang, Tatevik Sekhposyan · 2012 · 108 citations

In 1962, Arthur Okun posited an empirical relationship between the change in the unemployment rate and real output growth.Since then, the media, policymakers, pundits, and intermediate macro studen...

Okun's Law: Fit at Fifty?

Laurence Ball, Daniel Leigh, Prakash Loungani · 2013 · 108 citations

This paper asks how well Okun's Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980.We find that Okun's Law is a strong and stable ...

Why did unemployment respond so differently to the global financial crisis across countries? Insights from Okun’s Law

Sandrine Cazes, Sher Verick, Fares Al Hussami · 2013 · IZA Journal of Labor Policy · 95 citations

Abstract The global financial crisis deeply impacted labour markets around the globe. In the case of the United States, some commentators have argued that the subsequent rise in unemployment exceed...

Unemployment–inflation trade-offs in OECD countries

Keshab Bhattarai · 2016 · Economic Modelling · 70 citations

The effect of Unemployment on economic growth in South Africa

Sibusiso Clement Makaringe · 2018 · Munich Personal RePEc Archive (Ludwig Maximilian University of Munich) · 50 citations

This study sought to investigate the trends and impact of unemployment on economic growth in South Africa using quarterly data over the period 1994Q1 to 2016Q4. The Auto Regressive Distribution Lag...

Role of MSME in Absorbing Labor and Contribution to GDP

Muhammad Suhaili, Sugiharsono Sugiharsono · 2019 · Economics Development Analysis Journal · 48 citations

The purpose of this study is to analyze the role of MSMEs in absorbing labor and its contribution to GDP in Indonesia. The type of data used is secondary data from the Central Statistics Agency (BP...

Reading Guide

Foundational Papers

Start with Kreishan (2011) for time-series basics on Jordan data, then Owyang and Sekhposyan (2012) for Great Recession cycles, and Ball et al. (2013) for multi-country stability evidence.

Recent Advances

Study Makaringe (2018) for South Africa quarterly ARDL, Abu (2017) for Nigeria oil effects, and Kołodziejczak (2020) for EU sectoral GVA-employment links.

Core Methods

Core techniques: ARDL bounds testing (Abu, 2017), Chow structural break tests (Owyang and Sekhposyan, 2012), rolling regressions (Ball et al., 2013), and panel employment elasticities (Furceri et al., 2012).

How PapersFlow Helps You Research Structural Stability of Okun's Law

Discover & Search

Research Agent uses searchPapers and citationGraph to map 131-cited Kreishan (2011) connections to Owyang (2012) and Ball (2013), then exaSearch for 'Chow test Okun stability' uncovers Cazes (2013). findSimilarPapers expands to ARDL applications like Abu (2017).

Analyze & Verify

Analysis Agent runs readPaperContent on Ball et al. (2013) to extract stability coefficients, verifies with runPythonAnalysis replicating rolling regressions via pandas, and applies GRADE grading to coefficient robustness. verifyResponse (CoVe) checks statistical claims against Owyang (2012) data.

Synthesize & Write

Synthesis Agent detects gaps in post-2013 crisis stability via contradiction flagging across Cazes (2013) and Furceri (2012), then Writing Agent uses latexEditText, latexSyncCitations for Ball (2013), and latexCompile for econometric tables. exportMermaid visualizes break timelines.

Use Cases

"Replicate ARDL bounds test from Abu (2017) on Nigerian Okun data."

Research Agent → searchPapers 'ARDL Okun Nigeria' → Analysis Agent → runPythonAnalysis (pandas ARDL simulation with NumPy stats) → statistical output with p-values and bounds.

"Draft LaTeX section on Great Recession Okun breaks citing Owyang (2012)."

Synthesis Agent → gap detection → Writing Agent → latexEditText + latexSyncCitations (Owyang 2012, Ball 2013) → latexCompile → formatted PDF with stability table.

"Find GitHub code for Chow tests in Okun papers."

Research Agent → paperExtractUrls (Kreishan 2011) → Code Discovery → paperFindGithubRepo → githubRepoInspect → replication scripts for time-series breaks.

Automated Workflows

Deep Research workflow scans 50+ Okun stability papers via searchPapers → citationGraph → structured report on break frequencies (Ball et al., 2013). DeepScan applies 7-step CoVe to verify Cazes (2013) cross-country elasticities with runPythonAnalysis checkpoints. Theorizer generates hypotheses on policy-induced breaks from Furceri (2012) panels.

Try Doxa for Structural Stability of Okun's Law Research

Frequently Asked Questions

What defines structural stability in Okun's Law?

Structural stability tests for parameter invariance in unemployment-output links using Chow tests and rolling regressions amid crises (Owyang and Sekhposyan, 2012; Ball et al., 2013).

What methods test Okun stability?

Time-series techniques include ARDL bounds testing (Kreishan, 2011; Abu, 2017), rolling regressions (Ball et al., 2013), and panel elasticities (Furceri et al., 2012).

What are key papers on Okun stability?

Top-cited: Kreishan (2011, 131 citations) on Jordan; Ball et al. (2013, 108) on 20 economies; Owyang and Sekhposyan (2012, 108) on business cycles.

What open problems remain?

Post-2020 pandemic breaks untested; oil price interactions in ARDL need extension beyond Nigeria (Abu, 2017); micro-foundations for cross-country heterogeneity lacking (Cazes et al., 2013).