Date Thesis Awarded

2013

Document Type

Honors Thesis

Degree Name

Bachelors of Arts (BA)

Department

Economics

Advisor

Rui Manuel Pereira

Committee Member

Tanujit Dey

Committee Member

Carlisle E. Moody, Jr.

Abstract

This paper examines possible sources of asymmetries in Okun's law, which describes the relationship between cyclical changes in the unemployment rate and cyclical changes in output; that is, the relationship between deviations in unemployment from its natural rate and deviations in output from its trend. Macroeconomic shocks can generally explain the asymmetry in the Okun relationship between periods of economic expansion and contraction. We find no evidence of asymmetry between periods of positive and negative cyclical (above trend or below trend) output. In turn, we conclude that the asymmetry between periods of economic expansion and contraction results from policy decisions and exogenous shocks rather than an underlying structural component of the relationship such as inherent risk aversion among employers.

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Public Domain Dedication 1.0 License.

Comments

Thesis is part of Honors ETD pilot project, 2008-2013. Migrated from Dspace in 2016.

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