engleski

Application of the Okun's law in transitional economies on example of Croatia

Okun’s law, deducted on the data of the USA, shows a strong relation between the GDP growth above its normal rate of growth and the change in the unemployment rate. However, in the transitional economy like the Croatian one, the econometric analysis shows that the Okun’s law is not applicable, or it should be redefined. Not only the analysis results in completely different coefficients, but also we fail to reject every single null hypothesis regarding both the significance of the regression coefficients and explanatory power of the model as a whole. Thus it brought us to the conclusion that the Okun’s law might not be called Law, since the word law implies its application in each and every case. Also, it gives incentive for local economists to find a unique solution for each and every economic problem, because every transitional country has its specific characteristics that differ from the highly developed ones significantly.

Okun’s law; IV; OLS; regression; transitional countries; developed countries

nije evidentirano