Bayesian Linear Estimation of Okun Coefficient for Romania: Sensitivity to Priors Distributions

Authors: 
Caraiani, Petre
Publication date: 
2010/12/01
JEL codes: 
C51 - Model Construction and Estimation, E32 - Business Fluctuations; Cycles, E52 - Monetary Policy.
Abstract: 
I use the Bayesian approach in order to derive an estimation of Okun coefficient for Romania. The data used is at quarterly frequency and it consists in the unemployment rate and GDP between 2000 and 2009. I use three different priors, a normal one, a beta prior and a uniform pri or for the parameter associated to the Okun coefficient. The results indicate an Okun coefficient around -0.20, with the prior distributions having a mild effect on posterior mean results.
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