A PROVINCIAL PERSPECTIVE OF NONLINEAR OKUN'S LAW FOR EMERGING MARKETS: THE CASE OF SOUTH AFRICA
A PROVINCIAL PERSPECTIVE OF NONLINEAR OKUN'S LAW FOR EMERGING MARKETS: THE CASE OF SOUTH AFRICA
Author(s): Kambale Kavese, Andrew PhiriSubject(s): Financial Markets
Published by: Editura Universităţii Vasile Goldiş
Keywords: Economic growth; unemployment; Okun’s law; Provincial analysis; nonlinear ARDL model; Corbae-Ouliaris filter; South Africa; Emerging economies;
Summary/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.
Journal: Studia Universitatis Vasile Goldiş, Arad - Seria Ştiinţe Economice
- Issue Year: 30/2020
- Issue No: 3
- Page Range: 59-76
- Page Count: 18
- Language: English