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How Strong is the Correlation Between Unemployment and Growth Really? The Persistence of Okun's Law and How to Weaken it. WWWforEurope Policy Paper No. 23

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  • Stefan Marth

    (Austrian Institute of Economic Research)

Abstract

We examine Okun's Law on the basis of new growth perspectives and in the context of the WWWForEurope project. By comparing Okun's work from 1962 with the latest IMF and OECD surveys, a connection is set up and Okun's theoretical framework is updated and its persistence is examined. In addition, the implicit logic of Okun's Law is stressed, and literature is reviewed from this point of view as well. Furthermore, the main implicit component of Okun's Law – productivity – is taken into account when discussing its breakdown in the WWWForEurope context. After applying the "difference method", we derive the conclusion that the Okun coefficients and intercepts vary substantially between countries.

Suggested Citation

  • Stefan Marth, 2015. "How Strong is the Correlation Between Unemployment and Growth Really? The Persistence of Okun's Law and How to Weaken it. WWWforEurope Policy Paper No. 23," WIFO Studies, WIFO, number 58260, April.
    • Handle: RePEc:wfo:wstudy:58260
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    References listed on IDEAS

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    Cited by:

    1. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition – Part I: Synthesis. WWWforEurope Deliverable No. 11," WIFO Studies, WIFO, number 58791, February.
    2. Oliva, Leobaldo Enrique Molero & Eduardo, Salcedo Muñoz Virgilio & Vásquez, John Alexander Campuzano & Copo, Holger Fabrizzio Bejarano, 2019. "Análisis econométrico del comportamiento del desempleo en el Ecuador (segundo trimestre 2007 a cuarto trimestre 2017)," Revista Tendencias, Universidad de Narino, vol. 20(2), pages 22-48, July.
    3. Agranovich, Mark (Агранович, Марк), 2019. "Chances to be Employed for Employees at Pre-Retirement and Retirement Age [Оценка Шансов На Занятость Работников Предпенсионного И Пенсионного Возрастов]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 2, pages 90-109, April.

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