Okun’s Coefficient for Four Mediterranean Member Countries of EU: An Empirical Study

Abstract

In this paper, we estimate Okun’s coefficients for four Mediterranean countries of EU using real GDP and unemployment rate data. For the empirical analysis of the research we used annual data for the period 1961 – 2002 and Hodrick and Prescott filter (1997), a mathematical tool used in macro- economics and especially in business cycles theory, in order to find fictitious data using variation and correlation for both variables. Research results showed that unemployment cost, from the real GDP loss viewpoint, is larger for Italy (-0.024) and smaller for Greece (-0.007).