Okun's Law in the Philippines: Evidence from Household Final Consumption Expenditure

Abstract

This study examines the evidence of Okun’s Law in the Philippines on the variables of Unemployment rate and Household Final Consumption Expenditure. The researchers used the quarterly series of secondary data from 2010 to 2017 gathered from Bangko Sentral ng Pilipinas website. Moreover, battery of econometric tests are employed to ensure the reliability of the study. Regression results show that Unemployment rate is statistically significant with Household Final Consumption Expenditure at one percent level of significance. Furthermore, negative relationship on the aforementioned variables confirms the evidence of Okun’s Law in the Philippines. The researchers recommend the policymakers to continuously monitor the economic activity of the consumption sector, to attract investors to generate more jobs, to sustain the poverty alleviation programs of the government, and to monitor the consumption pattern for sustainable growth.