Скачать или смотреть Numericals on Okun’s Law, Phillips curve and AD relation (Intermediate Macroeconomics)

In this lecture, Mr. Naman Jain (Assistant Professor, Shaheed Bhagat Singh College, University of Delhi), explains and solves the numerical question on Okun’s Law from Olivier Blanchard’s Macroeconomics (5th Edition). The problem uses the estimated Okun’s Law for Canada:

uₜ − uₜ₋₁ = −0.4(gᵧₜ − 2.5%)

Mr. Naman walks through each part of the question in detail — analyzing how changes in output growth affect unemployment.

In part (a), he determines the growth rate of output that results in a 1% increase in unemployment, explaining why unemployment can rise even when output is growing positively.

In part (b), he calculates the growth rate of output required to reduce unemployment by 1 percentage point over four years.

In part (c), he discusses how Okun’s Law would adjust if a baby boom increases the growth rate of the labour force by 2 percentage points.

The lecture simplifies key macroeconomic relationships, helping students understand the link between economic growth and unemployment, and how labour force dynamics influence this connection.

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