CYCLICAL OUTPUT - UNEMPLOYMENT RELATIONSHIP: OKUN’S LAW PARAMETER FOR TURKEY

Authors : Ahmet TİRYAKİ, Obid KHAKİMOV

Pages : 1-14

View : 20 | Download : 9

Publication Date : 2017-03-01

Article Type : Research Paper

Abstract :The aim of this paper is twofold; to analyze the Okun’s law for Turkey and whether there exists a structural change in the relationship between cyclical output and unemployment after 2001 financial and economic crisis by using quarterly data from 1993 to end of 2008. Based on its “gap” specification and using different filtering methods-HP filter 1997,  Baxter-King 1995, and Unobserved Component Model,-different than the previous literature, the results show that there exists significant inverse relationship between unemployment and output for Turkey. However, the quantitative value of Okun’s coefficient is relatively bigger than the developed countries’ coefficient reported by original papers for whole period. Also, the claim about the Turkish cyclical output and unemployment faced structural change after 2001 crisis did not find any empirical support.
Keywords : Okuns law, Unemployment gap, Output gap, HP Filter, Turkey