The validity of Okun’s Law: Evidences from Indian economy

Unemployment is one of the most prominent issues being faced by developing countries especially India. Unemployment means productive resources not being utilized at all, which results low growth rate in real GDP. In macroeconomic terminology this relationship is called as Okun’s Law. The main aim of...

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Bibliographic Details
Published in:Theoretical and applied economics 2019-12, Vol.XXVI (4), p.273-278
Main Authors: Tariq Ahmad BHAT, Tariq Ahmad LONE, Towseef Mohi Ud DIN
Format: Article
Language:English
Subjects:
casual relationship
co-integration
gdp
okun
unemployment
Online Access:Get full text
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Summary:Unemployment is one of the most prominent issues being faced by developing countries especially India. Unemployment means productive resources not being utilized at all, which results low growth rate in real GDP. In macroeconomic terminology this relationship is called as Okun’s Law. The main aim of this paper is to examine whether there exists an Okun type relationship in Indian economy or not. Empirical result shows negative and significant effect of growth upon unemployment rate. Our model suggests that 1% increase in GDP will decrease unemployment rate by 0.4 percentage point.
ISSN:1841-8678
1844-0029