Okun's Law is written as (u-u(-1)=-0.4left(g_{Y}-3 %ight)) a. What is the sign of (u-u(-1)) in a recession?

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Okun's Law is written as $u-u(-1)=-0.4\left(g_{Y}-3 \%ight)$

a. What is the sign of $u-u(-1)$ in a recession? What is the sign of $u-u(-1)$ in a recovery?

b. Explain where the $3 \%$ number comes from?

c. Explain why the coefficient on the term $\left(g_{Y}-3 \%ight)$ is -0.4 and not -1 .

d. Suppose the number of immigrants per year allowed to enter the United States is sharply increased. How would Okun's law change?

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Macroeconomics

ISBN: 9780133780581

7th Edition

Authors: Olivier Jean Blanchard

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Question Posted: Mar 04, 2024 11:00 AM

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Okun's Law is written as (u-u(-1)=-0.4left(g_{Y}-3 %ight)) a. What is the sign of (u-u(-1)) in a recession?

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Macroeconomics

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