Test of Okun’s Law in Some Asian Countries Co-Integration Approach

The objective of this paper is to estimate the Okun’s coefficient, and to check the validity of Okun’s law in some Asian countries, whether it is valid or not, for this purpose we have used the time series annual data during the period 1980-2006. Engle Granger (1987) co integration technique is employed to find out long run association between variables and error correction mechanism (ECM) is used for short run dynamic. After getting empirical evidences it can be said that Okun’s law interpretation may not be applicable and also the principle of NAIRU does not hold its validity in some Asian developing countries. Our results have also supported to Noble Prize awarded Austrian economist Paul Krugman