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Theoretical and Applied Economics
No. 4 / 2019 (621), Winter

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

Tariq Ahmad BHAT
Vikram University Ujjain (M.P.), India
Tariq Ahmad LONE
Aligrah Muslim University (U.P.), India
Towseef Mohi Ud DIN
Vikram University Ujjain (M.P.), India

Abstract. 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.

Keywords: unemployment, GDP, Okun, Co-integration, casual relationship.

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The Economicity. The Epistemic Landscape, Marin Dinu, 2016


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