 Okun's Law: Fit at 50?Laurence Ball, Daniel Leigh and Prakash Loungani No 2013/010, IMF Working Papers from International Monetary Fund Abstract: This paper asks how well Okun’s Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980. We find that Okun’s Law isa strong and stable relationship in most countries, one that did not change substantiallyduring the Great Recession. Accounts of breakdowns in the Law, such as the emergence of“jobless recoveries,” are flawed. We also find that the coefficient in the relationship—the effect of a one percent change in output on the unemployment rate—varies substantially across countries. This variation is partly explained by idiosyncratic features of national labormarkets, but it is not related to differences in employment protection legislation. Keywords: WP; absolute value; Unemploymnent; Okun’s law; Economic fluctuations; Law captures factor; Law coefficient; unemployment rate; coefficient estimate; estimates of Okun's Law; unemployment-output relationship; unemployment-employment relation; Unemployment; Employment; Unemployment rate; Output gap; Employment protection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2013/010 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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