Modeling the Relationship between GDP and Unemployment for Okun's Law Specific to Jordan

16 Pages Posted: 24 May 2014 Last revised: 5 Aug 2014

See all articles by Hassan Alamro

Hassan Alamro

Mutah University

Qusay Falah Al-dalaien

Aqaba Economic Zone Authority

Date Written: April 13, 2014

Abstract

The objective of this paper is to measure the impact of economic growth on unemployment in the Jordanian economy in the short and long-run during the period (1980-2011) by implementing the Okun's law. The relationship is measured by performing the gap model with Hodrick-Prescott filter (HP filter) to calculate the potential gross domestic product. To this end, an Autoregressive Distributed Lag (ARDL) approach to co-integration and the Error Correction Model (ECM) are employed to represent the short and long term relationship. The results indicate that the economic growth has a weak significant negative short- and long-run effect on unemployment.

Keywords: unemployment, Okun's law, gap model, Autoregressive Distributed Lag (ARDL) approach, co-integration, Error Correction Model

JEL Classification: E, E2, E24, J, J0, J01

Suggested Citation

Alamro, Hassan and Al-dalaien, Qusay Falah, Modeling the Relationship between GDP and Unemployment for Okun's Law Specific to Jordan (April 13, 2014). Available at SSRN: https://ssrn.com/abstract=2440674 or http://dx.doi.org/10.2139/ssrn.2440674

Hassan Alamro

Mutah University ( email )

Karak, 61710
Jordan

Qusay Falah Al-dalaien (Contact Author)

Aqaba Economic Zone Authority ( email )

Aqaba - Jordan
Aqaba, +962
Jordan

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