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Federal Reserve Bank of Cleveland
Economic Commentary
An unstable Okun’s Law, not the best rule of thumb
Brent Meyer
Murat Tasci
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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Brent Meyer & Murat Tasci, "An unstable Okun’s Law, not the best rule of thumb" , Federal Reserve Bank of Cleveland, Economic Commentary, issue June, 2012.
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Keywords: Gross domestic product ; Unemployment
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