a) Okuns Law

It establishes the relationship between total output of countrys GDP to relative changes
in the unemployment rate or Arthur Okun (1962) stated that there is a negative
relationship between aggregate output and unemployment rate, which was popularly
known as Okuns law.
ut = + log Y t + t
ut =Changeemployment rate at period t .
= Intercept.
= Okun Co-efficient.
Y t =Growth rate of output.
t =Error term .
Adjusted Okuns law in case of more than one country
N

1,i C i+ 2,i C i+ log Y i ,t + t

i=1

ui ,t = +
i=2

ui , t=Changeunemployment country iat year t .

Ci =Dummy variable for country i .
Y i , t=Growth rate for country i .