Open Access Article

The Empirics of Okun’s Law Using Augmented ARDL: The Case of Pakistan

Authors

Shah Khalid(1) Shah Khalid Corresponding author Affiliation Assistant Professor of Economics, Department of Economics, University of Malakand Email addressskhalid77@gmail.com Other articles by this author , Ibrar Hussain(2) Ibrar Hussain Affiliation Assistant Professor of Economics, Department of Economics, University of Malakand Other articles by this author , Nafees Ahmad(3) Nafees Ahmad Affiliation Assistant Professor of Economics, Department of Economics, University of Malakand Other articles by this author , Riaz Ahmad(4) Riaz Ahmad Affiliation Lecturer of Economics, Department of Economics, University of Malakand Other articles by this author , Sajjadullah(5) Sajjadullah Affiliation Lecturer of Economics, Department of Economics, University of Malakand Other articles by this author

  1. Assistant Professor of Economics, Department of Economics, University of Malakand
  2. Assistant Professor of Economics, Department of Economics, University of Malakand
  3. Assistant Professor of Economics, Department of Economics, University of Malakand
  4. Lecturer of Economics, Department of Economics, University of Malakand
  5. Lecturer of Economics, Department of Economics, University of Malakand

https://doi.org/10.36923/jcmi.v6i2.646

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Abstract

From time series data covering 1972 to 2024, the objective of the study is to investigate the Okun's coefficient for Pakistan. The coefficient of Okun's law is determined using the Augmented ARDL econometric technique to estimate the long-run elasticities and short-run dynamics while sidestepping degenerate cases. Four variations of the Okun's law—the gap, difference, dynamic version, and augmented production function versions—are applied to estimate the Okun's coefficient. In order to measure output and unemployment gap, Hodrick-rescott (HP) filter is also used. The empirical results demonstrated that in case of Pakistan the law doesn’t hold as evidenced by the comparatively low coefficients obtained applying all four versions.

Article information

Keywords
Okun's lawOkun’s lawGap versionDynamic versionDifference versionUnemploymentPotential outputPotential OutputAugmented ARDLHodrick-Prescott (HP) filter
Section
Articles
Issue
Vol. 6 No. 2 (2025)
Submitted
August 14, 2025
Accepted
November 26, 2025
Published
December 2, 2025
Corresponding author
Shah Khalid
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