Alternative Methods of Estimating the Okun Coefficient. Applications for Romania

The purpose of this study is to estimate the Okun coefficient for Romania for the 1991-2004 period. In order to derive it, I use a few alternative methods. As a dependent variable I use the gap of the unemployment rate while the independent variable is the gap of the production, where the aggregate production is approximated by the industrial production. I estimate the relationship through an ARDL model and through a bivariate structural VAR. The results indicate an Okun coefficient of about -0.17 which suggests some rigidity of the labor market.