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Vladimir Arčabić and Eric Olson
''Estimates of okun's law using a new output gap measure''
( 2019, Vol. 39 No.2 )
This paper analyzes new measures for output and unemployment gaps proposed by Hamilton (2017) and estimates Okun's law. We compare the Hamilton (2017) approach to the popular Hodrick and Prescott (1997) filter. Our results show that HP filter tends to underestimate the magnitude of Okun's law relationship across 20 OECD countries.
Keywords: HP Filter, Okun's Law
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
Manuscript Received : Jun 16 2018 Manuscript Accepted : Apr 25 2019

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