Working Papers,
Örebro University, School of Business

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.

Keywords: Inflation; Unemployment; GDP growth; Bayesian VAR; Time-varying parameters

JEL-codes: C11; C32; E32; E52

Language: English

28 pages, November 26, 2025

Full text files

wp-15-2025.pdf  Full text

Download statistics

• Örebro University, School of Business
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:oruesi:2025_015This page generated on 2025-11-26 10:28:57.