okuns lawHoutput growth and changes in unemployment We assumed that output and employment moved together, so change in output led to equal changes in employment. And we assumed the labor force was constant, so changes in employment were reflected one for one in opposite changes in unemployment. Let gw denote the growth rate of output. Then, under these two assumptions the following relation should hold ue-u -gyt continue 2003-7-28 32003-7-28 3 Okun’s law:output growth and changes in unemployment We assumed that output and employment moved together, so change in output led to equal changes in employment. And we assumed the labor force was constant, so changes in employment were reflected one for one in opposite changes in unemployment. Let gyt denote the growth rate of output. Then, under these two assumptions ,the following relation should hold: ut –ut-1=-gyt (11.1) continue