A Cross-Province Comparison Of Okun’s Coefficient For Canada

In this paper, we estimate Okun’s coefficients for ten Canadian provinces using real GDP and unemployment rate data across the provinces. We obtain an average estimated Okun’s coefficient of –1.58 under the Hodrick-Prescott detrending method and –1.32 under the quadratic detrending method. There is relative stability of the coefficients across the two detrending methods. Generally, the cost of unemployment in terms of the loss in real GDP is higher in the bigger and more industrialized provinces ranging from –2.14 for Ontario to less than -1 for the Maritime provinces.