Okun's Law in the Visegrád Group Countries

Abstract

The article assesses the empirical validity of Okun's law on the relationship between a country's unemployment and its output with a focus upon the Visegrád Group economies and upon the post-transition period from the first quarter of 2000 until the first quarter of 2016. The study also accounts for cyclical fluctuations in male and female unemployment and applies different approaches to the estimation of Okun coefficients. Fixed long-run Okun coefficients are compared to the trajectories identified under the state space approach based on the Kalman filter in an attempt to capture their possible time non-constancy. The findings cast doubt about the universal validity of Okun's law in the Visegrád countries in the investigated period.