Bayesian estimation of the Okun coefficient for Romania

Caraiani, P. (2010) Bayesian estimation of the Okun coefficient for Romania. Acta Oeconomica, 60 (1). pp. 79-92. ISSN 0001-6373

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Abstract

In this paper I use a New Keynesian model with unemployment and estimate it for the Romanian economy using Bayesian techniques. I use the estimated model to derive an estimation of the Okun coefficient. I alternatively estimate the Okun coefficient using the Bayesian linear regression. The results show that the Okun coefficient is high in the Romanian economy implying that the current crisis will have a severe impact on the labour market as well as important social effects.

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