POTENTIAL-REAL GDP RELATIONSHIP AND GROWTH PROCESS OF NIGERIAN ECONOMY: AN EMPIRIICAL RE-EVALUATION OF OKUN’S LAW

  • Arewa A Faculty of management sciences, Department of accounting and finance Lagos State University, Lagos, Nigeria
  • Nwakanma P C Faculty of management sciences, Department of finance and banking University of Port Harcourt, River state, Nigeria

Abstract

The study provides an empirical evaluation of the relationship between output and unemployment using the ―first difference‖ and output-gab versions of the regression equations that were first estimated by Okun. The study particularly adopts vector autoregressive (VAR) mechanism to estimate this relationship; and finds out that the Okun‘s coefficient is not significant in Nigerian economy. But however, the trade-off between output-gab and unemployment gab is positive, meaning that a decrease in the gap between natural rate of unemployment and current rate of unemployment leads to a decrease in the difference between potential GDP and real GDP.

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Published
2012-05-20
How to Cite
A, A., & C, N. P. (2012). POTENTIAL-REAL GDP RELATIONSHIP AND GROWTH PROCESS OF NIGERIAN ECONOMY: AN EMPIRIICAL RE-EVALUATION OF OKUN’S LAW. European Scientific Journal, ESJ, 8(9). https://doi.org/10.19044/esj.2012.v8n9p%p