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ECONOMIC GROWTH AND UNEMPLOYMENT NEXUS: ARE VARYING CONDITION IN BULGARIA AND ROMANIA?

L. Dudas, L. Mihit, M. Dogaru, A. Iosif

First published: 2019https://doi.org/10.5593/SWS.ISCSS.2019.1/S03.047View metrics

Abstract

The relationship between economic growth and unemployment has been a topic of interest in academia for almost 60 years but with a special focus on developed countries and only recent papers present results at the regional level. This paper analyzes the regional OkunВ’s Law in two emerging countries, namely Bulgaria and Romania applying original data. To best achieve the research objective, we consider the widely valued specification of OkunВ’s Law, that investigates the relationship between the cyclical components of output and unemployment. Moreover, we favour the Hodrick-Prescott (HP) filter for a better comparison with the literature. We discover important regional heterogeneities of OkunВ’s, as in some Bulgarian and Romanian Regions the OkunВ’s coefficients are not statistically significant. Furthermore, we present an analysis of the economic drivers that explain why the Okun Law is significant only in some regions. Lastly, we highlight the importance of the regional characteristic in the design of fiscal policies by discussing some policy implication, since demand-side policies are effective in unemployment reductions only in regions where the OkunВ’s Law is significant.

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Publication details

Title
ECONOMIC GROWTH AND UNEMPLOYMENT NEXUS: ARE VARYING CONDITION IN BULGARIA AND ROMANIA?
Authors
L. Dudas, L. Mihit, M. Dogaru, A. Iosif
Proceedings
6th SWS International Scientific Conference on Social Sciences ISCSS 2019
Publisher
STEF92 Technology
Year
2019
Pages
347-354
SWS Citekey
Dudas20193347354
ISSN
2682-9959
ISBN
978-619-7408-91-1
Language
en
Publication type
Proceedings Paper
Keywords
Okun Lawgrowthunemploymentemerging countries
References15

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