Monday, February 01, 2010
Okun's Law
This Des Moines Register is saliant. As the author notes, unemployment data is a lagging indicator. The author notes that the stock market is usually high when unemployment is high. I subscribe to the Keynesian theory that in the short run firms will meet demand. Since many firms are monopolistically competitive, they can see an additional unit as long as price is greater than marginal cost. Firm will labor horde. Thus, unemployment lags. It seems to fit the data nicely.
Subscribe to:
Post Comments (Atom)
I would love to see the graph, or some numbers. Rumors of encouraging relationship is one thing, but seeing the data is another and more interesting thing.
ReplyDeleteexcellent.
ReplyDelete