<abstract xmlns="http://www.w3.org/1999/xhtml"><p>A provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive distributive lag (N-ARDL) model whilst the Corbae-Ouliaris filter is used to extract the ‘gap’ variables required for our regression estimates. Okun’s law is found to be significant hold in the long-run exclusively for the Western Cape and Kwa-Zulu Natal provinces whereas the remaining provinces partially display significant short-run effects. Our sensitivity analysis in which panel N-ARDL estimations for all provinces finds insignificant long-run Okun effects for the country as a whole, whilst validating the relationship only in the short-run. Our study hence advises that the epicenter of policy efforts in addressing the country’s high unemployment and low economic growth dilemma should be concentrated at a provincial level.</p></abstract>

A provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive distributive lag (N-ARDL) model whilst the Corbae-Ouliaris filter is used to extract the ‘gap’ variables required for our regression estimates. Okun’s law is found to be significant hold in the long-run exclusively for the Western Cape and Kwa-Zulu Natal provinces whereas the remaining provinces partially display significant short-run effects. Our sensitivity analysis in which panel N-ARDL estimations for all provinces finds insignificant long-run Okun effects for the country as a whole, whilst validating the relationship only in the short-run. Our study hence advises that the epicenter of policy efforts in addressing the country’s high unemployment and low economic growth dilemma should be concentrated at a provincial level.

A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

Studia Universitatis „Vasile Goldis” Arad – Economics Series

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

A provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive...

A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

Published Online: Jul 16, 2020

Page range: 59 - 76

Received: Apr 01, 2020

Accepted: May 01, 2020

DOI: https://doi.org/10.2478/sues-2020-0017

Keywords
Economic growth, unemployment, Okun’s law, Provincial analysis, nonlinear ARDL model, Corbae-Ouliaris filter, South Africa, Emerging economies

© 2020 Kambale Kavese et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

Published Online: Jul 16, 2020

Page range: 59 - 76

Received: Apr 01, 2020

Accepted: May 01, 2020

DOI: https://doi.org/10.2478/sues-2020-0017

KeywordsEconomic growth, unemployment, Okun’s law, Provincial analysis, nonlinear ARDL model, Corbae-Ouliaris filter, South Africa, Emerging economies

© 2020 Kambale Kavese et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Economic growth, unemployment, Okun’s law, Provincial analysis, nonlinear ARDL model, Corbae-Ouliaris filter, South Africa, Emerging economies