Talk:Okun's law

Read the article, now that somebody found it online. It's available at http://cowles.econ.yale.edu/P/cp/p01b/p0190.pdf — Preceding unsigned comment added by 212.203.107.122 (talk) 08:23, 11 May 2012 (UTC)

sectorized Okun's Laws ?

The US macroeconomy is composed of several sectors (agriculture, industry, services), whose sector-specific outputs (sector real GDP) plausibly depend on sector-specific employment levels (sector worker-hours). Thus, Okun's Law for the US macroeconomy plausibly reflects a weighted-average, of several sector-specific Okun's Laws. Over the past century, the US economy has shifted from agriculture, to industry, and then to services. Thus, the macroeconomic "3% - 1%" Okun's Law, from decades ago, plausibly reflected more of agriculture & industry; whereas the more recent "2% - 1%" Okun's Law, plausibly reflects more of the service sector. Utilizing online data from the World Bank, for the period 1981-2010, agricultural output increased 3% per 1% increase in agricultural employment level; industrial output increased 1% per 1% increase in industrial employment level; and services output increased 0% per 1% increase in services employment level, i.e. services output was statistically uncorrelated to services employment level, perhaps resembling government-sector output & employment:

http://img341.imageshack.us/img341/382/employmentgdpbysector.png

And so, the shifting "posture" of the US macroeconomy, away from agriculture, towards services, plausibly explains the observations of Federal Reserve Chairman Ben Bernanke, that the overall macroeconomic Okun's Law has "softened", from "3% - 1%" decades ago, to "2% - 1%" at present. — Preceding unsigned comment added by 24.143.92.97 (talk) 00:17, 25 July 2012 (UTC)

Okun's Law & Crime ?

According to the popular economics book Freakonomics, a 1% decrease in unemployment (1% increase in employment) correlates with a 1% decrease in crime. Inexpertly interpreted, "workers aren't criminals"; when more people are working, fewer people are committing crimes. 24.143.92.97 (talk) 01:34, 18 August 2012 (UTC)

Get rid of the pseudophysics

How do we get rid of the physics stuff in this? I can't see it in the edit screens... —Preceding unsigned comment added by 80.194.237.152 (talk) 13:45, 6 February 2008 (UTC)

Is there any possible way to get rid of the term "law," for heaven's sake? Evolution, which is "empirically observed" everywhere is not a law. This "law" is so universal that it only applies to the 20th century economy of the United States, looking backwards, and when unemployment falls inside specific parameters; it will be generally applicable until it isn't (which could be anytime). — Preceding unsigned comment added by 173.23.191.206 (talk) 13:49, 3 April 2012 (UTC)

"Mathematical Statements" Needs Revision

The mathematical derivation of Okun's law appears to be incorrect based on the information that I've read from various texts.

For example, Robert E. Hall and David H. Papell define Okun's Law as: (Y-Y*)/Y* = -a(u-u*). Y is actual output, Y* is potential output, a is a coefficient describing what percentage real GDP will be below potential GDP, u is the unemployment rate and u* is the natural rate of unemployment. (Macroeconomics: Economic Growth, Fluctuations, and Policy, Hall and Papell, 6th ed., 2005, pp. 76-77).

If it turns out that my reading is correct, the page "Output Gap" would also need to be corrected, along with the subsequent "Derivation of the growth rate form of Okun's law.

The only reason I haven't corrected the issue is that I need confirmation from others before overhauling the page(s). —Preceding unsigned comment added by Astepintothedark (talk • contribs) 20:21, 3 April 2009 (UTC)

Okun's law can be specified in different ways. I don't think the current version is incorrect; it just expresses the same basic relationship in a different way.--Bkwillwm (talk) 02:59, 4 April 2009 (UTC)

I am also under the impression that this part needs a serious revision. First off, if anyone would want to perform a regression analysis based off of the information on this page, the "law" (rule of thumb) states that the unemployment rate is the dependent variable and GNP the independent one. This is, of course, open to discussion regarding shock effects (change in GNP changes unemployment and unemployment changes GNP), but generally this is how the relationship is described and it relates to simultaneous causality.

Also, Y-bar in the equation in the article is not past GNP (or GDP), but potential GNP (GDP) under full employment. This should be corrected.

It could also be interesting if anyone would incorporate the notion that Arthur Okun actually seems to have used circular logic when deriving this equation (See "Is Okun's law useful" by Knotek, 2007) 46.239.107.81 (talk) 18:45, 6 February 2012 (UTC)Hugo