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Output and Unemployment Relationship:How Applicable Is the Okun's Law to Nigeria?

Ola-David , Oluwayomi and Oluwatobi, Stephen and Ogundipe, Adeyemi A. (2016) Output and Unemployment Relationship:How Applicable Is the Okun's Law to Nigeria? The Social Sciences, 11 (8). pp. 1422-1427. ISSN 1818-5800

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Okun's Law is one of the most enduring stylistic facts in macroeconomics. The objective of this study is to investigate the existence of an Okun-type relationship for the Nigerian economy during the period 1970-2013. After a unit root check was carried out using the Augment Dickey Fuller and Philip Perron tests, the Johansen cointegration technique was employed to find out whether or not long nm relationship exists. It was discovered that a long nm inverse relationship exists between rmemployment and GDP in Nigeria. The Ohm coefficient was 1.75% indicating that a 1% decrease in rmemployment rate is accompanied by a 1.75% increase in GDP. The coefficient in Okun's original work was 3% which is greater than the coefficient fmmd in this study. This study supports the argwnent that the slope coefficient in the Okun's model is rmstable, hence, it varies across economies and periods. Thus, every effort made towards reducing the level of rmemployment in Nigeria impacts the level of output on an increasing scale.

Item Type: Article
Uncontrolled Keywords: Unemployment, Okun's Law, Okun Law coefficient,cointegration, Nigeria
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Hannah Akinwumi
Date Deposited: 21 Jun 2018 08:59
Last Modified: 21 Jun 2018 09:40

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