Table of Contents
1. Okun's Law
Named after Arthur Melvin Okun, who proposed the relationship in 1962.
The stability and usefulness of the law has been disputed.
1.1. Statement
The unemployment rate and the country's GDP have negative correlation.
\begin{equation*} -\frac{Y - \bar{Y}}{\bar{Y}} = c(u - \bar{u}) \end{equation*}where \( Y \) is the actual output, \( \bar{Y} \) is potential GDP, \( u \) is actual unemployment rate, \( \bar{u} \) is the natural rate of unemployment, \( c \) is a factor.