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2012•Economic Commentary (Federal Reserve Bank of Cleveland)Open access

An Unstable Okun’s Law, Not the Best Rule of Thumb

Brent Meyer, Murat Tasci

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Abstract

Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate—why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun’s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.

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Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate—why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun’s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.

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OpenAlex reports 53 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

Okun’s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate—why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun’s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.

Key concepts: Rule of thumb, Okun's law, Unemployment, Economics, Unemployment rate, Econometrics, Rule of law, Thumb

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