A spatial econometric multivariate model of Okun's law

A system of two dynamic spatial panel data model equations is developed in which output growth and the change unemployment rate are interdependent. The parameters estimated by recently maximum likelihood techniques for multivariate econometric models, using twelve provinces Netherlands over period 1974–2018, covering four major economic downturns Dutch economy. By time-cumulative marginal effects derived from impulse response function this model, it found that Okun's law dominated relationship runs to unemployment. amount needed reduce one percentage point shown depend on extent spillover neighboring regions multiplier accounted for.