Dynamic version of Okun’s law in the EU15 countries: The role of delays in the unemployment‐output nexus

We find that the negative relationship between unemployment and output generally holds over time. However, Okun's coefficient varies substantially across countries. The dynamic version can shed light on different country estimates found in the literature. The paper argues that lag effects need to be considered to avoid possible misspecification. A mixed-lag structure indirectly controls for potential missing explanatory variables such as the role of labour market institutions.