Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339198 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 15/2025
Publisher: 
Örebro University School of Business, Örebro
Abstract: 
In this paper, we analyse whether two key macroeconomic relationships in Australia - Okun's law and the Phillips curve - have been stable over time. This is done by estimating hybrid time-varying parameter Bayesian VAR models using quarterly data from 1978 to 2024. Model comparison based on marginal likelihoods indicates that Okun's law has been stable, whereas the Phillips curve has not. Using the preferred specification of the BVAR for the unemployment rate and inflation, we also calculate trend values for both variables. The model's trend unemployment rate at the end of the sample is approximately five percent; estimated trend inflation at the same point in time is close to the Reserve Bank of Australia's inflation target.
Subjects: 
Inflation
Unemployment
GDP growth
Bayesian VAR
Time-varying parameters
JEL: 
C11
C32
E32
E52
Document Type: 
Working Paper

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