1997•Applied Economics LettersRequires access

The paper-bill spread and Blanchard's version of Okun's law

Christian E. Weber

Abstract

Blanchard (1989) interprets Okun's Law as a relationship between VAR innovations in output and the unemployment rate. Adding the paper-bill spread to a bivariate VAR in output growth and the unemployment rate and even ordering it ahead of the unemployment rate when estimating the structural disturbances does not alter Blanchard's finding that Okun's coefficient for output and unemployment rate innovations rate is around -0.18.

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Key concepts: Okun's law, Economics, Bivariate analysis, Unemployment rate, Unemployment, Econometrics, Misery index, Macroeconomics