Effect of Economic Growth on Unemployment and Validity of Okun’s Law in Mauritius

Q2 Economics, Econometrics and Finance

Global Journal of Emerging Market Economies Pub Date : 2020-01-23 DOI:10.1177/0974910119886934

Usha Devi Chuttoo

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引用次数: 6

Abstract

This study examines the relationship between unemployment and economic growth in Mauritius. The methodology adopted for this study is the autoregressive distributed lag (ARDL) bounds cointegration test, ARDL error-correction model (ARDL-ECM) using the ordinary least square (OLS) approach and Okun’s law-gap version. ARDL-ECM estimates the long-run and short-run relationship between economic growth and unemployment. The validity of Okun’s law is tested in the Mauritian context and Okun’s coefficient is thereby estimated. The results obtained from the tests show that both in the long run and short run, there is a negative cointegration between economic growth and unemployment, but it is not statistically significant. Whereas, the result of Okun’s law-gap version shows that Okun’s law is indeed valid in the small economy of Mauritius. From the Okun’s coefficient obtained, it is concluded that 4 percent change in gross domestic product (GDP) growth rate changes unemployment rate by 1 percent in the opposite direction in Mauritius.

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毛里求斯经济增长对失业的影响及奥肯定律的有效性

本研究考察了毛里求斯失业与经济增长之间的关系。本研究采用的方法是自回归分布滞后(ARDL)界协整检验，ARDL误差校正模型(ARDL- ecm)采用普通最小二乘(OLS)方法和Okun 's law-gap版本。ARDL-ECM估计了经济增长与失业之间的长期和短期关系。在毛里求斯的背景下测试了奥肯定律的有效性，并由此估计了奥肯系数。检验结果表明，无论在长期还是短期，经济增长与失业之间都存在负协整关系，但不具有统计学意义。然而，奥肯定律缺口版本的结果表明，奥肯定律在毛里求斯这个小型经济体中确实是有效的。根据得到的奥肯系数，得出的结论是，在毛里求斯，国内生产总值(GDP)增长率的4%变化会使失业率向相反方向变化1%。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Global Journal of Emerging Market Economies Economics, Econometrics and Finance-Economics, Econometrics and Finance (miscellaneous)

CiteScore

2.70

自引率

0.00%

发文量

期刊介绍： Global Journal of Emerging Market Economies is a peer-reviewed journal. The aim of the journal is to provide an international platform for knowledge sharing, discussion and networking on the various aspects related to emerging market economies through publications of original research. It aims to make available basic reference material for policy-makers, business executives and researchers interested in issues of fundamental importance to the economic prospects and performance of emerging market economies. The topics for discussion are related to the following general categories: D. Microeconomics E. Macroeconomics and Monetary Economics F. International Economics G. Financial Economics H. Public Economics I. Health, Education, and Welfare J. Labor and Demographic Economics L. Industrial Organization O. Economic Development, Innovation, Technological Change, and Growth Q. Agricultural and Natural Resource Economics • Environmental and Ecological Economics R. Urban, Rural, Regional, Real Estate, and Transportation Economics Additionally, the journal would be most interested to publish topics related to Global Financial Crisis and the Impact on Emerging Market Economies Economic Development and Inclusive Growth Climate Change and Energy Infrastructure Development and Public Private Partnerships Capital Flows to and from Emerging Market Economies Regional Cooperation Trade and Investment and Development of National and Regional Financial Markets The Belt and Road Initiative.