Oksana Sytnyk, Mariana Považanová, Faculty of Economics, Matej Bel University in Banská Bystrica, Slovak Republic
Martin Boďa, Faculty of Economics, Matej Bel University in Banská Bystrica, Slovak Republic; Faculty of Social and Economic Studies, University of Ján Evangelista Purkyňe in Ústí nad Labem, Czech Republic

Type of article: scientific article
Pages: 25 – 51

Abstract

The paper employs a regression approach based on a systematically functionally varying slope coefficient in order to estimate Okun’s law for the three Baltic economies for the years 2000 – 2022. The Okun equation is extended with a complementary structural equation expressing the Okun coefficient as a deterministic function of selected time-varying factors from a broader set. The Baltic economies are viewed as a single common economic region with national specificities, but synchronized development, and explanatory factors are chosen with regard to the high trade openness of Baltic economies and their active participation in international relations. It was found that international economic relations, whether represented through export activity, investment flows or labour force mobility, can satisfactorily explain the mutual relationship between unemployment and output over the business cycle.