The validity of Okun’s Law: Evidences from Indian economy

Tariq Ahmad Bhat, Tariq Ahmad Lone and Towseef Mohi Ud Din
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Tariq Ahmad Bhat: Vikram University Ujjain (M.P.), India
Tariq Ahmad Lone: Aligrah Muslim University (U.P.), India
Towseef Mohi Ud Din: Vikram University Ujjain (M.P.), India

Theoretical and Applied Economics, 2019, vol. XXVI, issue 4(621), Winter, 273-278

Abstract: Unemployment is one of the most prominent issues being faced by developing countries especially India. Unemployment means productive resources not being utilized at all, which results low growth rate in real GDP. In macroeconomic terminology this relationship is called as Okun’s Law. The main aim of this paper is to examine whether there exists an Okun type relationship in Indian economy or not. Empirical result shows negative and significant effect of growth upon unemployment rate. Our model suggests that 1% increase in GDP will decrease unemployment rate by 0.4 percentage point.

Keywords: unemployment; GDP; Okun; Co-integration; casual relationship. (search for similar items in EconPapers)
Date: 2019
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