Examining Okun´s law validity in North Macedonia (2010q1-2020q4)

Abstract

The following paper examines Okun’s law application in North Macedonia in the period from the first quarter of 2010 to the last quarter of 2020. After examining the developments concerning GDP and unemployment the paper focuses on estimating Okun’s coefficient through static and dynamic approaches. The inclusion of lagged regressors is also taken into consideration. The results, obtained through the static gap and difference versions signify a weak link, while the dynamic approaches utilized identify a strong negative relationship. Keywords(Okun’s law, dynamic version, gap version, OLS, unemployment, North Macedonia, econometrics)