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Study on Nonlinear Link between Growth and Unemployment of China

Author: WangLei
Tutor: LinXiuMei
School: Jilin University
Course: Quantitative Economics
Keywords: Economic Growth Employment Nonlinear Okun 's Law
CLC: F249.2;F224
Type: Master's thesis
Year: 2006
Downloads: 380
Quote: 2
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Abstract


It is well known that there are four targets of macroeconomic policy: Growth, full employment, price stabilization and the balance of international trade payments. The ideal situation is to achieve all of these four goals, hence the relationship between these four targets, especially the quantitative relationship between them has become an important project of macroeconomics. Up to now, People have made two main contributions in this area. One is the famous Phillips curve, which discovered by an English economist called A·W·Phillips. The other is Okun’s law, which is proposed by the US economist whose name is A·M·Okun.Okun’s empirical formulation provides important reference to the economic policymaker that in order to avoid the raise of unemployment, the real output must no less than the underlying output. If the policymaker want to bring down the unemployment rate, he must do everything possible to make the real output exceed the underlying output.Since Okun’s(1962)formulation of the empirical regularity that from then onwards would be known as‘Okun’s law’, the inverse relationship between unemployment and GDP gaps that was postulated in this seminal contribution has been the central object of multiple scientific articles. While there is discrepancy as to the actual quantitative magnitude of this relationship, there seems to be a consensus concerning the empirical validity of Okun’law.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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