Okun’s Law as a Pi-to-1 ratio: A harmonic / trigonometric theory as to why Okun’s Law works

Scott Albers

MPRA Paper from University Library of Munich, Germany

Abstract: “Okun’s Law” states a 3:1 proportion between percent growth in U. S. real GNP and percent decrease in the rate of unemployment. This paper argues that this ratio is actually a Pi:1 proportion, heretofore unrecognized because it is displayed through a form of mathematic / harmonic inverse. In Part One the Cartesian coordinate system is merged with the legal doctrines of actus reus (x-axis, actions) and mens rea (y-axis, thoughts). A unit circle of personal choice – including economic choice (trading vs. keeping) – may thereby be devised. This unit circle is then aggregated into a torus, half the circumference of which represents U.S. real GNP (Pi), the antipodal half-circumference its monetary value (Pi) and the radius the rate of employment necessary to its production (R = 1). Mainstream econometric analysis appears to support this theory of inverses with proximities of within 1.3%, 1.0%, 0.35%, 0.00105% and less than half a degree. In Part Two this model of Okun’s Law is connected closely to an analysis of the well-known Kondratiev Wave, a 56-year “Long Wave” of evolving social and economic relationships. This approach to macroeconomics is thereby aligned with a geometric, harmonic and trigonometric analysis of empirical data, rather than purely statistical methods.

Keywords: Okun’s Law; Kondratiev wave; unemployment; GNP growth; Long wave; trigonometric analysis; unit circle; Okun’s coefficient; steady-state rate of growth; pi; phi; the Golden Mean; harmonic analysis (search for similar items in EconPapers)
JEL-codes: A12 A13 B00 B4 B41 B5 B59 C1 C19 C5 E1 E10 E19 E3 P1 P16 Z0 Z00 (search for similar items in EconPapers)
Date: 2013-04-30
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