Okun’s law in the Spanish regions.

Abstract

The purpose of this paper is to analyse Okun’s law for Spain and its seventeen regions over the period 1980-2004. Based on its “gap” specification and using two different detrending techniques, the results show that an inverse relationship between unemployment and output holds for most of the Spanish regions and for the whole country. However, the quantitative values of Okun’s coefficients for these regions are quite different. In addition, the coefficients for each region varied across the two detrending techniques. Even so, these coefficients are lower than those initially estimated by Okun and others.