The paper implements the flexible nonlinear inference approach of Hamilton (2001) to assess the validity of Okun's law. Using U.S. quarterly data from 1948:1 to 2004:2, we find overwhelming evidence of nonlinearity between cyclical components of unemployment and output. However, the relationship is still negative and provides strong support of (nonlinear) Okun's law.
Relation:
2005財經學術研討會論文集(上)=Proceedings of 2005 Conference on Economics and Business，頁B2-87-100
