Our presidentiables must learn from ‘Okun’s law’
A simple “rule of thumb” called the Okun’s law, named after 1960’s American economist Arthur Melvin Okun, may still be relevant today, despite becoming outdated the past few decades with the changing components of the economy.
Okun’s guide to high growth. Okun simplified the statistical relationship between employment and GDP with his popular ratio then, which states that for “every 1-percent decline in the unemployment rate, GDP increases by 3 percent. Conversely, he added that if the unemployment rate increases or worsens by 1 percent, GDP falls by 2 percent.
For awhile, Okun’s observations were often proven true that his statistical ratios were called “Okun’s law.” More so, when employment then was directly related to production-related activities in industry and agriculture.
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