Time series assignment. The significance of Okun's law in forecasting ...

Academic Paper from the year 2022 in the subject Business economics - Economic Policy, grade: 93, University of Cape Town (Commerce), course: Quantitative Methods for Economists, language: English, abstract: This paper aims to analyse the relationship between unemployment rate and economic growth in the United States of America (US) which can be explained by the Okun’s law. It uses time series data on Gross Domestic Product (GDP) and unemployment to test the significance of Okun’s law in forecasting economic fluctuations in the country. With the aid of data analysis and several regressions, this paper finds resounding evidence to conclude that despite the widespread popularity, acceptance and applicability of the Okun’s law, it is not the most effective forecasting tool for economic growth in the US.