Abstract
Okun’s law describes the empirical relationship between changes in unemployment and output at the macroeconomic level and has been regarded since its discovery by Arthur Okun (Potential GNP: its measurement and significance. In: Proceedings of the business and economics statistics. American Statistical Association, Washington, DC, p 98–104, 1962) as a building block of traditional macroeconomic models. This article discusses the interpretation of this relationship and summarizes recent developments in the econometric specification of Okun’s law.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Cuaresma, J.C. (2008). Okun’s Law. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2346-1
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2346-1
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Publisher Name: Palgrave Macmillan, London
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