Okun's Law

The relationship between an economy's unemployment rate and its gross national product (GNP). Twentieth-century economist Arthur Okun developed this idea, which states that when unemployment falls by 1%, GNP rises by 3%. However, the law only holds true for the U.S. economy, and only applies when the unemployment rate falls between 3-7.5%. Other version of Okun's Law focus on a relationship between unemployment and GDP, whereby a percentage increase in unemployment causes a 2% fall in GDP.

The percentage by which GNP changes when unemployment changes by 1% is called the "Okun coefficient". Industrialized nations with labor markets that are less flexible than those of the United States, such as France and Germany, tend to have higher Okun coefficients. In those countries, the same percentage change in GNP has a smaller effect on the unemployment rate than it does in the United States.

Investment dictionary. . 2012.

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  • Okun's law — Graph of US quarterly data (not annualized) from 1947 through 2002 estimates a form of the difference version of Okun s law: %Change GNP = .856 1.827*(Change Unemployment Rate). R^2 of .504. Differences from other results are partly due to… …   Wikipedia

  • Okun's Law — Das Okunsche Gesetz (auch Okuns Gesetz) beschreibt die Korrelation zwischen Produktionswachstum und Arbeitslosigkeit in einer Volkswirtschaft, die erstmals von Arthur Melvin Okun (1928–1980) anhand von Wirtschaftsdaten aus den USA untersucht… …   Deutsch Wikipedia

  • Okun Gap — A macroeconomic term that describes the situation when an economy s potential gross domestic product (GDP) differs from its actual gross domestic product. The gap can either be recessionary or inflationary, but will depend on the economy s… …   Investment dictionary

  • Loi d'Okun — Croissance trimestrielle et évolution du taux de chômage aux États Unis entre 1947 et 2002 La loi d Okun, en économie, a été proposée par Arthur Okun en 1962[1]. Elle décrit une relation linéaire empirique entre le taux de …   Wikipédia en Français

  • Ley de Okun — Este artículo o sección necesita referencias que aparezcan en una publicación acreditada, como revistas especializadas, monografías, prensa diaria o páginas de Internet fidedignas. Puedes añadirlas así o avisar …   Wikipedia Español

  • Arthur Melvin Okun — Arthur Melvin Art Okun (November 28 1928 in Jersey City, New Jersey March 231980 Washington D.C.) [ [http://www.nndb.com/people/916/000161433/ Arthur M. Okun ] ] was a U.S. economist. He served as the chairman of the Council of Economic Advisors… …   Wikipedia

  • O|kun's law — «OH kuhnz», U.S. Economics. a formula that shows the correlation between the rate of unemployment and the gross national product. Okun s law indicates how much unemployment will rise for every $1 billion decline in the gross national product.… …   Useful english dictionary

  • Закон Оукана — OKUN’S LAW Зависимость между отношением реального ВНП к потенциальному и безработицей. На основе анализа данных о величине ВНП в Америке в 60 80 е годы А. Оукан (1929 1979) вывел следующую закономерность: увеличение уровня безработицы на 1%… …   Словарь-справочник по экономике

  • Output gap — Potential (light) and actual (bold) GDP estimates from the Congressional Budget Office. The difference between the two represents the GDP gap …   Wikipedia

  • Macroeconomics — Circulation in macroeconomics Macroeconomics (from Greek prefix makros meaning large + economics ) is a branch of economics dealing with the performance, structure, behavior, and decision making of the whole economy. This includes a national,… …   Wikipedia

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