Okun’s law and the unemployment surprise of 2009

Mary Daly and Bart Hobijn

FRBSF Economic Letter, 2010, issue mar8

Abstract: In 2009, strong growth in productivity allowed firms to lay off large numbers of workers while holding output relatively steady. This behavior threw a wrench into the long-standing relationship between changes in GDP and changes in the unemployment rate, known as Okun?s law. If Okun?s law had held in 2009, the unemployment rate would have risen by about half as much as it did over the course of the year.

Keywords: Productivity; Unemployment (search for similar items in EconPapers)
Date: 2010
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