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An Empirical Analysis of the Relationship Between GDP and Unemployment

Farzad Farsio (Professor of Economics/Finance, College of Business, Montana State University‐Billings, Billings, Mt 59105)
Stacey Quade (College of Business, Montana State University‐Billings, Billings, Mt 59105)

Humanomics

ISSN: 0828-8666

Article publication date: 1 March 2003

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Abstract

Okun's law has been proven to be one of the most accepted theories in the macroeconomics field. It describes the relationship between gross domestic product (GDP) and unemployment. Arthur Okun's (1962) study was developed to help apply appropriate macroeconomic policy changes. Though the coefficient has been re‐estimated, Okun's original work states that a one‐percentage point reduction in the unemployment rate would produce approximately 3% more output. This correlation has continuously been scrutinized, its accuracy studied, and the degree of dependency these variables have on one another has been evaluated.

Citation

Farsio, F. and Quade, S. (2003), "An Empirical Analysis of the Relationship Between GDP and Unemployment", Humanomics, Vol. 19 No. 3, pp. 1-6. https://doi.org/10.1108/eb018884

Publisher

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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