The impact of GDP growth rate on unemployment in the eurozone.
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AuthorMarqués López, Darío
Director/aBadillo Amador, Rosa María; Tena Nebot, Susana
CenterFacultad de Ciencias de la Empresa
UniversityUniversidad Politécnica de Cartagena
Knowledge AreaFundamentos del Análisis Económico
The purpose of this study is to analyze, inside the Okun’s Law framework, the effect the growth of production has on the unemployment rate on each country of the Eurozone. Additionally, the reasons why this effect can be different between countries will be analyzed. The Okun’s Law is a well known empirically inverse relationship between the unemployment rate and production growth rate variables of a given country. This concept was defined in 1962 by the american economist Arthur Okun. In this study, Okun did notice a strong linear relationship between the GDP growth rate and the unemploy ment rate from 1947 to 1960 for the United States, which is still relevant in financial and macro economic fields. Regarding to the definition of Okun’s Law, the mentioned relationship between GDP, unemployment rate and their own percentage variatio ns must be necessarely negative ( Ceteris Paribus ) . Essentially, economies in a position ...
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