okuns law:output growth and changes in unemployment e According to the experience, the relation actually should be 0.4(gyt-3%) (11.2) e Equation(11.2) differs in two ways from equation(11.1) o Annual output growth has to be at least 3% to prevent the unemployment rate from rising The coefficient on the deviation of output growth from the normal growth rate is-0. 4 in equation(11.2), not.0 in equation (11.1) To continue 2003-7-282003-7-28 4 Okun’s law:output growth and changes in unemployment According to the experience, the relation actually should be: ut –ut-1= -0.4(gyt – 3%) (11.2) Equation (11.2) differs in two ways from equation (11.1) ⚫ Annual output growth has to be at least 3% to prevent the unemployment rate from rising ⚫ The coefficient on the deviation of output growth from the normal growth rate is –0.4 in equation (11.2), not –1.0 in equation (11.1). To continue