International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Does There Exist Okun’s Law in Pakistan?
Khalil Ahmad, Khalil Ahmad, Allah Ditta Saeed

This study tests the relevance of Okun’s law to Pakistan economy. For this purpose, two versions of Okun’s law —‘the difference’ version and ‘the gap’ version — were tried using annual time series data on growth rate of gross domestic product and unemployment for the period from 1974 to 2009. As the variables included in both the models were stationary at the level, the ordinary least squares method was employed to extract the coefficient of Okun’s law. Neither of the models witnessed existence of Okun’s law to Pakistan Economy. The study recommends further research on the issue incorporating the possible interaction between inflation and unemployment. Further, government agencies collecting and maintaining socio-economic data should make utmost effort to collect and publish accurate and reliable data in Pakistan.

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