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Do forecasters believe in Okun’s Law? An assessment of unemployment and output forecasts

Laurence Ball (), Joao Jalles () and Prakash Loungani ()

International Journal of Forecasting, 2015, vol. 31, issue 1, 176-184

Abstract: This paper provides an assessment of the consistency of unemployment and output forecasts. We show that, consistent with Okun’s Law, forecasts of real GDP growth and the change in unemployment are negatively correlated. The Okun coefficient—the responsiveness of unemployment to growth—from forecasts is fairly similar to that in the actual data for various countries. Furthermore, revisions to unemployment forecasts are negatively correlated with revisions to real GDP forecasts. These results are based on forecasts taken from Consensus Economics for nine advanced countries since 1989.

Keywords: Labor market; Forecast revisions; Great Recession; Forecast assessment (search for similar items in EconPapers)
Date: 2015
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Working Paper: Do Forecasters Believe in Okun’s Law? An Assessment of Unemployment and Output Forecasts (2014) Downloads
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