Macroeconomic Shocks and Okun's Law
- Author(s)
- Alexander Ziegenbein
- Abstract
I propose a simple method to estimate a macro shock-specific Okun elasticity, which characterises by how much the unemployment rate falls when output increases by one percentage point because of a specific macroeconomic shock. Using data for the US, I consider government spending, tax, monetary policy, financial, technology, and oil shocks. I find the Okun elasticity is largely stable across shocks, but subtle differences emerge: (i) the elasticity is larger for financial shocks, (ii) the speed at which unemployment adjusts relative to output depends on the shock driving fluctuations.
- Organisation(s)
- Department of Economics
- Journal
- Economics Letters
- Volume
- 202
- No. of pages
- 4
- ISSN
- 0165-1765
- DOI
- https://doi.org/10.1016/j.econlet.2021.109826
- Publication date
- 05-2021
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502018 Macroeconomics
- Keywords
- ASJC Scopus subject areas
- Economics and Econometrics, Finance
- Sustainable Development Goals
- SDG 8 - Decent Work and Economic Growth
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/macroeconomic-shocks-and-okuns-law(0df85a5d-5555-45ae-85b4-42a4079d0c3d).html