Okun's law

Okun's law [r]: An empirically-observed relationship between a change in output and change in unemployment, normally expressed as change in unemployment rate  = α - β x  change in real output,  where α is an intercept coefficient, and  β is the elasticity of the unemployment rate with respect to output, and based on the finding that, in the United States of the 1950s, and 1960s, for every one percent increase in unemployment there had on average been a three percent drop in the ratio of actual GDP to full capacity GDP. ^[e]

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