A New Framework for Output-Unemployment Relationship: Okun’s Law Revisited

Mustafa Ismihan ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper provides a new and useful framework for developing various models to investigate the output-unemployment relationship. By using this framework, a simple but reasonable theoretical background to Okun’s law is derived. This theoretical background, in turn, facilitates the decomposition of Okun’s law coefficient into several quantifiable and interpretable components that incorporate main insights from Arthur Okun’s original analysis. The empirical decomposition exercise indicates that Okun’s law has an inherent tendency to vary substantially over time, especially, in response to the structural changes in legal, institutional and other related characteristics of labor and goods markets.

Keywords: output-unemployment relationship; Okun’s law (search for similar items in EconPapers)
JEL-codes: C2 E24 E32 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28135

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