Holmes, M. & Silverstone, B. (2005). Okun’s law, asymmetries and jobless recoveries in the United States: A Markov-switching approach. (Department of Economics Working Paper Series, Number 6/05). Hamilton, New Zealand: University of Waikato.
Permanent Research Commons link: http://hdl.handle.net/10289/1644
This paper offers a new perspective on Markov regime-switching approaches to asymmetries in Okun’s law by modeling the existing approaches as special cases. Prevailing models assume either asymmetry between unemployment and output across regimes or asymmetry within a single regime. Our specification combines both approaches. Our empirical results give an insight into the apparent ‘jobless recovery’ experiences that began in the United States in 1991 and 2001.
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