Solutions to problems according to okun's law. Okun's law and the theory of "full employment" of the population Okun's law states that

Okun's law is a law whereby a country loses 2 to 3% of actual GDP in relation to potential GDP when the actual unemployment rate increases by 1% over its natural rate.

Okun's Law Formula

A quantitatively expressed relationship between fluctuations in the unemployment rate and fluctuations in GDP is formulated in Okun's Law, after the American economist Arthur Okun, who first discovered it. In accordance with Okun's law, the deviation of the output from its natural level is inversely proportional to the deviation of the unemployment rate from its natural level, or:

V-V * / V * = -ß (U-U n),

where V is the actual GDP;
V * - potential GDP;
U is the actual level of unemployment;
Un is the natural rate of unemployment;
β is the empirical coefficient of sensitivity of GDP to the dynamics of cyclical unemployment (Okun's coefficient).

For example, according to Okun's calculations, in the American economy of the 60s, the parameter β was 3. At the same time, the rate of natural unemployment was 4%.

This meant that every percentage of the excess of real unemployment over its natural level led to a fall in real GDP by 3%.

In the 1980s, Okun's coefficient in the United States fell to 2, and the natural unemployment rate rose to 5.5%. This means that if the actual unemployment rate is 7.5%, then in this case the volume of output will be 96% of the potential (100% - (7.5% - 5.5%) 2).

Inflation and unemployment are serious macroeconomic and economic destabilizing phenomena. The problem is aggravated by the fact that measures to limit, for example, unemployment stimulate inflation and vice versa. Therefore, the art of economic policy is to find a balance between these two factors of macroeconomic instability.

To analyze the economic situation, Okun's law is often used. The coefficient, which was derived by the scientist, characterizes the relationship between the unemployment rate and It was discovered on the basis of empirical data in 1962 by the scientist, after whom he was named. Statistics show that an increase in unemployment by 1% leads to a decrease in actual GDP from potential by 2%. However, this ratio is not constant. It may differ depending on the state and time period. The relationship between quarterly changes in unemployment rate and real GDP - this is the Formula, it should be noted, is still criticized. Its usefulness in explaining market conditions has also been questioned.

Okun's law

The coefficient and the law behind it appeared as a result of processing statistical data, that is, empirical observations. It was not based on the original theory, which was then tested in practice. Arthur Melvin Oaken saw a pattern by studying statistics for the United States. It is approximate. This is because the gross domestic product is influenced by many factors, not just the unemployment rate. However, such a simplified consideration of the relationship between macroeconomic indicators is sometimes also useful, as shown by Okun's research. The coefficient derived by the scientist reflects the inverse relationship between the volume of production and the unemployment rate. Oaken believed that the 2% increase in gross product was associated with the following shifts:

• drop in level by 1%;
• employment growth by 0.5%;
• an increase in the number of working hours for each worker by 0.5%;
• productivity growth by 1%.

Thus, having reduced Okun's cyclical unemployment rate by 0.1%, an increase of 0.2% can be expected. However, this ratio varies for different countries and time periods. The relationship was tested in practice for both GDP and GNP. Martin Prachovnya estimates that a 3% decline in production is associated with a 1% decrease in unemployment. However, he believes that this is only an indirect dependence. According to Prachovnya, production volumes are more influenced not by unemployment, but by other factors, for example, capacity utilization and the number of hours worked. Therefore it is necessary to drop them. Prachovny calculated that a 1% decrease in unemployment leads to a GDP growth of only 0.7%. Moreover, the dependence is becoming weaker over time. In 2005, Andrew Abel and Ben Bernarke analyzed recent statistics. They estimate that a 1% increase in unemployment leads to a 2% drop in production.

Causes

But why does the GDP growth rate exceed the percentage change in the unemployment rate? There are several explanations for this:

• Action The more people are employed, the greater the demand for goods. Therefore, the volume of production can grow at a faster rate than the level of employment.
• Imperfect statistics. The unemployed may simply stop looking for work. If this happens, they disappear from the "radar" of the statistical agencies.
• Again, those who are actually employed may start working less. This is practically not displayed in statistics. However, this situation significantly affects production volumes. Therefore, with the same number of employees, we can actually get different indicators of the gross product.
• The decrease can be associated not only with the deterioration of the organization, but also with the excessive number of employees.

Okun's law: formula

Let's introduce the following conventions:

• Y is the real volume of production.
• Y '- potential gross domestic product.
• u is real unemployment.
• u 'is the natural level of the previous indicator.
• c - Okun's coefficient.

Taking into account the above conventions, the following formula can be derived: (Y '- Y) / Y' = c * (u - u ').

In the United States, since 1955, the latter indicator has usually been 2 or 3, as shown by the above empirical studies. However, this version of Okun's Law is rarely used because potential levels of unemployment and gross domestic product are difficult to estimate. There is another version of the formula.

How to calculate GDP growth

To calculate the GDP growth rate, we introduce the following conventions:

• Y is the actual volume of the issue.
• ∆u is the change in the actual unemployment rate compared to the previous year.
• C is Okun's coefficient.
• ∆Y - change in actual output compared to last year.
• K is the average annual production growth at full employment.

Using these designations, the following formula can be derived: ∆Y / Y = k - c * ∆u.

For the modern period in US history, the C coefficient is 2, and the K coefficient is 3%. Thus, the equation is derived: ∆Y / Y = 0.03 - 2∆u.

Usage

On practice

Suppose the unemployment rate is 10% and the actual gross domestic product is 7,500 billion currency units.

St. Petersburg

State University of Economics and Finance

An essay on macroeconomics on the topic:

Okun's Law

Completed: Nikiforov Maxim (352 gr)

Scientific adviser: V.V. Amosova

Saint Petersburg 2009

Introduction

Unemployment: Essence

Okun's coefficient calculation

Conclusion

List of used literature

Introduction

The negative relationship between unemployment and economic growth was named "Okun's Law" in honor of the American economistArthur Oaken , who established an empirical relationship between these parameters in the early 1960s.

He expressed the established dependence by the formula:

Yf is the real value of the national full employment income.

Y is the real value of the national income.

(Yf - Y) - "market gap"

Okun's parameter

U is the actual unemployment rate.

U * is the natural unemployment rate.

(U-U *) - the level of opportunistic unemployment.

The meaning of this formula expresses the so-called Okun's law: if the conjunctural unemployment grows by 1 point, then the conjunctural gap increases by points.

That is, the relationship between the change in the unemployment rate and the gap between the actual and potential volumes of GDP is described. Oaken linked this to the fact that when opportunistic unemployment appeared:

Not all laid-off workers are registered as unemployed;

Some of those who remain at work are transferred to a shorter working day;

The average labor productivity is decreasing due to the presence of hidden unemployment in production.

Let's dwell on unemployment in more detail.

Unemployment: Essence

In real life in a market economy, "full employment" is constantly accompanied by unemployment.

Unemployment is the part of the working-age population who temporarily or permanently lost their jobs.

Labor demand depends on the amount of capital spent on labor, or variable capital. A relative reduction in this capital entails a relative reduction in the demand for labor. The accumulation of capital leads to the drawing into production of less and less additional labor power.

The growth of technical structure, embracing new capitals, subsequently spreads to the old, previously functioning capitals. Each capital must be renewed over time, since all elements of fixed capital eventually wear out. But with the renewal of old capital, its technical structure usually does not remain unchanged, it increases. This leads to an absolute reduction in the demand for labor, to the displacement of a part of the previously employed workers from production.

Suppose that the old capital was $ 10 million and consisted of $ 5 million spent on material conditions of production and $ 5 million spent on labor. Then the time came for the renewal of this capital, and it is renewed in a new composition: the ratio is no longer 1: 1, but 3: 1. In this case, out of $ 10 million, material conditions will account for $ 7.5 million, and labor force of only 2.5 million dollars. Consequently, the capital spent on labor power, and at the same time the demand for labor power will be halved.

As a result of both of the above processes - the slowed-down attraction of additional labor due to the growth of the technical structure of newly invested capital and the expulsion of a part of the previously employed workers from production as a result of the growth of the organic structure of old capital - an army of unemployed is inevitably formed.

Education and the rise in unemployment represent a specific law of population. The essence of the law of population is that hired labor, contributing to the growth of profits, creates a source for the accumulation of capital, while the latter, through the growth mechanism of the technical structure of capital, creates an industrial army of the unemployed. In this regard, the unemployed represent a relative overpopulation. Labor power becomes surplus in relation to the demand for it. This does not mean at all that there is an absolute surplus of the population.

The root cause of the formation of unemployment is the growth of the technical composition of capital.

Thus, the industrial reserve army is a product of capital accumulation in a market economy.

Unemployment is when a part of the active population cannot find a job and becomes a “surplus” population - a reserve army of labor. Unemployment increases during economic crises and subsequent depressions as a result of a sharp decline in the demand for labor.

Okun's coefficient calculation

According to many calculations carried out at intervals from 1948 (from that time on the quarterly GDP statistics for the United States appeared) to the present, GDP growth, in which there is no change in the unemployment rate, averages about 3% per annum. This value can be interpreted as a result of the growth of the economically active population, capital ratio and total productivity of production factors (or, if you like, scientific and technological progress, which is not the same, but close). A change in the unemployment rate by 1 percentage point corresponds to a deviation of real GDP growth by 2 points from this level.

But this is the American version. To check the operation of the law in Russia, we will use statistical data:

1) First, let's look at the left side of the formula. We need to calculate the size of the market gap. To do this, one should know the potential production volume Yf with the given technique - the national income of full employment, and the actual national income Y. 1

Now we calculate the gap:

Now we can find out the values ​​of the left side of the formula by dividing the market gap by the national full employment income: 2

The data is calculated as a percentage for the convenience of further conversions.

Now the level of opportunistic unemployment:

All the data required for calculating the Okun's coefficient has been obtained. It will be equal to the ratio of the market gap divided by the national income of full employment to the market unemployment rate.

The average will be 1.43. This means that each percentage of opportunistic unemployment reduced the actual volume of GNP by 1.43% in comparison with the GNP of full employment.

During the previous recession of 1990-1998, which, judging by the dynamics of GDP, was much deeper than the current one, the problem of unemployment seemed to be felt less acute. And what can the statistics say about this? How much has the flexibility of employment in relation to output increased over the inter-crisis decade?

The elasticity of the unemployment rate to GDP, calculated for the period from 1995 to 2008, is about 2. That is, with a 10% drop in GDP, the unemployment rate on average grew by about 20% (specifically, percent, not percentage points!), Then there is, instead of, say, 7, it becomes 8.4%. The reaction, as we can see, is, on the whole, unusually weak. This is most likely due to the fact that the period 1995–1998, which saw the most profound changes in both GDP and employment, is critically important for determining the average elasticity. And this is still a completely different economy, with low-elastic employment. Many people preferred to stay at their previous workplace, receiving a penny, hoping to survive difficult times, and the same, still "Soviet" principles of employment, in general, adhered to the management of enterprises.

Therefore, in 1999, employment grew very slowly, despite the rise in GDP: enterprises had large internal reserves not only of production capacity, but also the intensity of the use of cash workers.

In the future, the reaction of employment to changes in GDP dynamics, in particular to the acceleration of growth in 2006-2007 and to the recession in 2008-2009, turns out to be much sharper than predicted by the "mean-interval" equation. In the period 2005-2008, a similar elasticity is already about 5, which means that a drop in GDP by 10% will cause an increase in the unemployment rate from 7 to about 10.5%. That is, the reaction according to Okun turns out to be approximately 1 to 3: for 1 percentage point of increase in unemployment, there is a 3% fall in GDP.

How much can unemployment rise with the current elasticity and some reasonable forecast of a decline in GDP? The Ministry of Economic Development and Trade in its forecast expects a decrease in the annual GDP in 2009 by 2.2%, assuming that the decline in production will go on at least the first two quarters. Under these assumptions and the V-shaped curve of production dynamics during the current year, the drop in GDP at the bottom (that is, in the second quarter of this year) relative to the peak in the third quarter of last year will be approximately 6% (in terms of seasonally adjusted volumes), and, based on elasticity of the unemployment rate to GDP at 5, the latter at the lowest point of the recession will not exceed 8 percent with a little. If, under the same assumptions, the annual GDP falls by 5%, then the bottom of the GDP will fall by 11% to the peak, and the unemployment rate at the lowest point of the crisis will exceed 10%. Finally, with the same 5% annual decline in GDP, but with an L-shaped recession, the bottom to the peak - 7%, the unemployment rate, respectively, is lower, about 8.5%, but it remains the same for at least three quarters until the end of this of the year.

However, the value of these arithmetic exercises is not very high. Perhaps, in the interval where we estimated the elasticity of unemployment to GDP, the same wait-and-see behavior of employers was partly observed as during the 1998 crisis, and the real sensitivity of unemployment to recession will ultimately turn out to be much higher. 3

Conclusion

In general, I agree with the opinion above. I think the law can work. But, for this, the economy must be developed, "calm" ... In Russia, something is constantly happening. Often the reasons are not so much economic as political. Moreover, in our country, many things are illegal. And the laws are far from in favor of entrepreneurs, small and medium-sized businesses. Therefore, even if there were really full employment or employment close to full (3-4%), there would still be a lot of restraining mechanisms for objectively reflecting the increase in the labor force in GDP growth. Law Oaken... Actual or Observed Level ...

Okun's Law is used most often when analyzing the economic situation. The scientist introduced this coefficient to characterize the ratio of the unemployment rate and the growth rate.

In 1962, Oaken deduced a pattern based on empirical data. Statistics have shown that a 1% increase in unemployment can lead to a fall in actual gross domestic product in line with potential GDP by 2%. This ratio is not constant and differs depending on the country and time period.

Thus, Okun's law represents the ratio of quarterly changes in the unemployment rate and real GDP.

Okun's Law Formula

The Okun's Law formula looks like this:

(Y ’- Y) / Y’ = c * (u - u ’)

Here Y is the real volume of GDP,

Y '- potential GDP,

u is the real unemployment rate,

u 'is the natural rate of unemployment,

c - Okun's coefficient.

Okun's coefficient since 1955 in the United States has usually been equated to 2 or 3.

This Okun law formula is used in rare cases, since the level of potential GDP and the unemployment rate are difficult indicators to assess.

There is a second version of the Okun's law formula:

∆Y / Y = k - c * ∆u

Here Y is the actual production volume,

∆Y is the change in the actual level of production in comparison with the previous year,

∆u is the change in the actual unemployment rate in comparison with the previous year,

c - Okun's coefficient,

k is the average annual growth of production under the condition of full employment.

Criticism of Okun's Law

Until now, the Okun's Law formula has not received recognition and has been criticized by many economists who question its usefulness in explaining market conditions.

Okun's law formula appeared as a result of processing statistical data, which are empirical observations. The law was not based on a solid theoretical basis, tested in practice, since Okun expressed the pattern only in the study of US statistics.

Statistics are approximate, and gross domestic product can be influenced by a large number of factors, not just one unemployment rate.

Nevertheless, this simplified consideration of the dependence of macroeconomic indicators can often be useful, as shown by Okun's research.

Features of Okun's Law

The scientist derived a coefficient that reflects the inverse relationship between the volume of production and the level of unemployment. Oaken believed that GDP growth of 2% is associated with the following shifts:

It can be noted that by reducing Okun's cyclical unemployment rate by 0.1%, the expected rate of increase in real GDP will be 0.2%. But for different states and time periods, this value will vary, since the dependence was practically tested for GDP and GNP.

Examples of problem solving

Unemployment rate - 10%,

Actual gross domestic product (GDP) - 7,500 billion rubles.

Difference between actual and natural unemployment rate:

That is, GDP lags behind the potential value by 8%. If we take the actual gross product as 100%, then we get the following result:

ru.solverbook.com

Okun's law

Problem number 38. Determining government policies to stabilize the economy

In the country's economy, the natural unemployment rate is 7%, and the actual rate is 9%. Potential GDP is $ 3,000 billion, Okun's coefficient is 2.5. What policy should the government pursue to stabilize the economy (consider all possible instruments) if the marginal propensity to consume is known to be 0.9.

Problem number 51. Calculating potential GDP

The unemployment rate this year was 7.5%,

and actual GDP - $ 1,665 billion.

The natural unemployment rate is 5%.

Determine the potential GDP value if Okun's coefficient is 3.

Problem number 52. Calculating actual GDP

The unemployment rate this year was 6.5%.

Natural unemployment rate - 5%,

and Okun's coefficient is 2.

Potential GDP is $ 2,550 billion.

Determine the GDP lag (in%) and the GDP losses caused by cyclical unemployment (in billions of dollars).

Problem number 53. Calculation of Okun's coefficient and natural unemployment rate

The potential GDP was $ 100 billion, the actual GDP was $ 97 billion, and the actual unemployment rate was 7%.

When actual GDP fell by $ 6 billion, the unemployment rate rose to 9%.

Determine the value of Okun's coefficient and the natural rate of unemployment.

Problem number 54. Calculation of potential GDP, actual and natural unemployment rate

The country's economy is characterized by the following indicators:

total population of 400 million people,

working-age population - 280 million,

number of employees - 176 million,

the number of frictional unemployed - 6 million,

the number of structural unemployed - 8 million,

the number of cyclical unemployed - 10 million people.

Actual GDP is $ 2,040 billion and Okun's coefficient is 3.

Determine the size of the potential GDP, the actual unemployment rate, the natural unemployment rate.

Problem number 55. Calculation of actual GDP and actual unemployment rate

total population - 200 million people,

working-age population - 160 million people,

number of employees - 112 million people,

natural unemployment rate - 6.4%,

the number of cyclical unemployed - 5 million people.

The potential GDP is $ 2,500 billion, and the Okun's coefficient is 2.4.

Determine the value of the actual GDP, the actual unemployment rate, the number of frictional and structural unemployed.

Problem number 61. Calculation of losses from unemployment

The potential volume of output at a natural unemployment rate of 6% is 6,000 billion den. units. When cyclical unemployment of 1% appears, the actual volume of output deviates from the potential by 120 billion den. units. Determine the losses from unemployment if the actual unemployment rate is 8.5%
Solution

Okun's Law solutions

The population of the country is 100 million people. The share of the labor force in the population is 55%. The productivity of one employee is 12 thousand UAH per year. Actual. The country's GDP is UAH 600 billion. The natural rate of unemployment is 5%. Determine the unemployment rate of the population.

M pc = 100 million people

2. The number of employed is determined by the formula:

where. GDPf - actual. GDP; h - productivity of one employed

3. Number of unemployed :

Bw = 55 million people - 50 million people = 5 million people

4. The unemployment rate is calculated by the formula:

The natural rate of unemployment is 5%, and its actual level is 7%. Define. GDP-gap, provided that the coefficient of sensitivity to the dynamics of cyclical unemployment is 2.5, and the actual one. GDP is 900 million December.

1. Find the percent deviation of the actual. GDP from natural result of cyclical unemployment according to the formula:

2. Now let's calculate the natural. GDP:

GDP * 0.05 =. GDP * - 900

GDP * = 947 360 000 UAH

So,. GDP-growth is now: 947.36

900 = 47.36 million UAH

Determine the unemployment rate in the national economy under the following conditions:

1) the population of the country is 100 million people;

2) the population under the age of 16 - 20 million people;

3) are in special institutions - 4 million people;

4) natural. GDP - UAH 940 billion b) natural rate of unemployment - 6%;

6) actual. GDP is 85% natural. GDP;

7) persons who left the workforce - 26 million. Decision:

1. Determine the size of the workforce:

2. Number of employed according to the natural rate of unemployment: 50 million people

3. Then the productivity of one employee:

4. Actual volume. GDP:

0.85 940 billion UAH = 799 billion UAH

5. Number of employed:

6. Number of unemployed:

Bw = 50 million people - 39,950,000 people = 10,050,000 people

7. The unemployment rate is determined by the formula:

In 2000, the country's economy was developing in conditions of full employment (the natural unemployment rate was 6%). Actual. GDP was equal to potential and amounted to UAH 300 billion. In 2005, the actual. GDP amounted to UAH 371 1 billion, potential - UAH 412 billion.

In 2005, determine the level of actual unemployment (with

1. Using the law. Okun, let's calculate the level of actual unemployment using the formula:

2 will make the proportion:

3. Determine the unemployment rate:

The natural unemployment rate in the country is 6%, the actual - 15%. Coefficient p = 2.5

Determine the relative lag of the actual. GDP from potential; losses. GDP caused by cyclical unemployment, if actual. GDP is UAH 150 billion

1. The volume of the relative lag of the actual. GDP from potential is determined by the formula. Oaken

2. The amount of potential. GDP is

GDP * = 193,550,000,000 UAH

3. The losses caused by cyclical unemployment are nothing but. The GDP gap is calculated as follows:

GDP gap = UAH 193.55 billion -

- UAH 150 billion = UAH 43.55 billion

Self-study assignments

In the reporting year, the labor resources of the region amounted to 1,810 thousand people, including those of working age - 1,720 thousand people; working older persons and adolescents - 120 thousand people, of which: employed in the national economy (without personal peasant farms) - 1571 thousand people, students - 129 thousand people, unemployed citizens of working age - 189 thousand people, including the involuntarily unemployed (looking for this slave) - 73 thousand axles. OSIB.

Determine the level of employment of the able-bodied population in the national economy of the region for the reporting year, the level of employment of students, the level of unemployed able-bodied citizens of working age, including those looking for a robot.

The unemployment rate in the region in the reporting year was 12%. It is necessary to reduce this figure to 5%. Using the law. Oken, calculate the rate of change required for this. Gdp

If the unemployment rate is 7.8%, then at what rate should it grow. GDP to bring the unemployment rate down to 6.5%: a) in one year b) in two years?

Analyze the number of employed in all types of economic activity and separately in trade in the western regions and in Ukraine as a whole for 2003-2007 pp (tab. 1)

Using the spreadsheets of the MS Excel package, build a calculation and analytical table in which to determine the specific gravity (in percent) of the split indicator. Build a line diagram illustrating the dynamics of changes in workers by type of economic activity.

Using the spreadsheets of the MS Excel package, based on the indicators in Table 2, analyze the dynamics of the number of employed citizens in the western regions of Ukraine in 2003-2007 pp, as well as calculate the share of women in the total number of employed people.

Make a forecast for the next five years, using to build a model for. Your choice, statistical functions linest, trend, forecast, logest, growth. Conclusions are presented in the form of a linear diagram of the equation and trend.

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Solution. Examples of problem solving;

Examples of problem solving

Formulas for solving problems

1. Formula of Okun's law

Y is the actual volume of production;

Y * - potential volume of GNP;

u * is the natural level of unemployment;

c - empirical coefficient of GNP sensitivity to the dynamics of cyclical unemployment;

2. The general level of labor resources is determined by the formula:

R is the actual availability of labor resources;

L is the working population;

3. The general level of the unemployed is determined by the formula:

U is the actual level of unemployment;

F - officially registered

R is the total number of people willing to work.

1. Actual GDP is 3712 billion dollars, potential GDP - 4125. Determine the level of actual unemployment, if the actual level is 6% (with в = 2.5).

To determine the actual unemployment rate, we apply the Okun's law formula:

After algebraic transformations:

Thus, the actual unemployment rate was 10%

2. Calculate cyclical unemployment under the following conditions: labor force - 4 million people, employed - 3.5 million people, natural unemployment - 6%. What will be the difference between actual and potential GDP under these conditions?

Macroeconomic tasks

Example 1. Suppose that in a given year, the natural unemployment rate was 5%, and the actual rate was 9%. Using Okun's law, determine the value of the GNP volume lag as a percentage. If the nominal GNP in the same year was equal to 50 billion rubles, how much production was lost due to unemployment.

Problem number 303 (calculating the inflation rate and price index)

If the price index was 110 last year and 121 this year, what will the inflation rate be this year? What does the "rule of magnitude 70" mean?

Problem number 18 (calculating the unemployment rate)

The table presents data on labor resources and employment in the first and fifth years of the period under review (in thousand people): First year Fifth year.

Problem number 14 (calculation of macroeconomic indicators)

Problem number 415 (Okun's law problem)

Example 1. Suppose that in a given year, the natural unemployment rate was 5%, and the actual rate was 9%. Using Okun's Law.

Problem number 15 (calculation of GNP, NNP, consumption and investment)

National production includes two goods: X (consumer goods) and Y (means of production). This year, 500 units of X were produced.

Okun's Law is an economic law according to which an increase in the share of unemployed in the total labor force above the natural level of unemployment by 1% leads to a decrease in the volume of production of the gross national product by 2.5%. The excess of the actual unemployment rate over the natural level is 4% (9% -5%), therefore, the lag in the volume of production of the gross national product is:

If the size of GNP in the same year was equal to 50 billion rubles, then the volume of production that was lost due to unemployment was:

50 * 10/100 = 5 billion rubles.

Example 2. Calculate, in accordance with Okun's Law, the loss of actual GDP due to cyclical unemployment under the following conditions:

• actual unemployment - 8%;
• natural unemployment - 5%;
• nominal GDP - 900 billion CU;
• price index - 120%.

The excess of the actual unemployment rate over the natural level is 3% (8% -5%), therefore, the loss of GDP is:

Actual (real) GDP, i.e. nominal GDP adjusted for the price index is:

GDPf = 900 / (120/100) = 750 bln.

So, if the actual size of GDP was equal to 750 billion units, then the loss of GDP (i.e. the volume of production that was lost due to unemployment) was:

750 * 7.5 / 100 = 56.25 billion.

Example 3. The economy is described by the following data: the natural unemployment rate is 6%, the actual unemployment rate is 7.33%, potential GDP increases by 3% per year. How fast should the actual volume of production increase in order to ensure full employment of resources next year with a natural level of unemployment? The coefficient of sensitivity of GDP to the dynamics of cyclical unemployment is equal to 3.

For each percentage of excess of the actual unemployment rate over the natural level, the loss of GDP is 3% (this relationship is known as Okun's law). According to the condition of the problem, this excess is 1.33% (7.33-6). Therefore, the GDP losses are equal:

GDP = 1.33 * 3 = 4% of potential GDP.

Therefore, all other things being equal, for full employment to be achieved, it is necessary that actual GDP be increased by an amount equivalent to 4% of potential GDP.

In the next year, the potential GDP will increase by 3%, by the same 3%, in order to ensure full employment, it should be increased in the actual GDP.

In this case, the total growth of actual GDP should be equivalent to a value equal to 7% (4 + 3) of potential GDP.

Okun's law- the relationship between the rate of unemployment and the growth rate of GDP, suggesting that an increase in unemployment by 1% above the level of natural unemployment reduces real GDP compared to potential by 2.5%. (Y-Y *) / Y * = -B (u-u *) Y - actual GNP;
Y * - potential GNP;
u * - cyclical unemployment rate;
u is the natural rate of unemployment;
B is the empirical coefficient of GDP sensitivity to the dynamics of cyclical unemployment (usually 2.5%);
It also follows from Okun's Law that if production decreases by 2.5% during a recession, then this increases cyclical unemployment by 1%. In addition, the law states that the annual growth of real GNP must be 2.5% in order for unemployment to remain at the same level, since the labor force is growing at about the same rate every year.

Objective 1. In this year, the natural unemployment rate was 5%, and the actual level was 9%, nominal
The excess of unemployment is 9/5 = 1.8%, which gives the GNP lag by 1.8 * 2.5% = 4.5% the volume of potential GNP
GNPP = 500 (100% + 4.5%) / 100% = 522.5 billion dollars.
GNP deficit
∆VNP = 522.5 - 500 = 22.5 billion dollars.

Problem 2. In this year, the natural unemployment rate was 5%, and the actual level was 9%, actual GNP in the same year amounted to $ 500 billion. What is the volume of potential GNP, how much was lost due to unemployment (deficit - GNP)?
In this case, the lag of actual GDP from potential will be: (9 - 5) x 2.5% = 10%. Knowing the volume of GDP, we get the absolute underproduction of GDP from unemployment. Underproduction will be equal to $ 50 billion (500 billion x 0.10). These will be the economic losses of society from unemployment.

Problem 3... Determine the amount of lag of the actual GNP from the potential, using Okun's law, if it is known: the actual GNP in the current year - 2350 billion dollars; excess of the actual level of unemployment over the natural level - 2.4%; coefficient (Oaken) of GNP sensitivity to the dynamics of cyclical unemployment - 2.5. Calculate the GNP losses caused by cyclical unemployment. Draw the necessary conclusions.
Solution... 1) calculate the value of the relative deviation of the actual GNP Yf from the potential GNP Yn using Okun's law:
(Yf - Yn) / Yn = 2.5 x 2.4% = -6%,
2) determine the value of the potential GNP:
(2350 - Yн) / Yн = -0.06.
Yн = 2500 billion rubles;
3) calculate the GNP losses caused by cyclical unemployment: 2350 - 2500 = - 150 billion rubles.
Conclusions: The excess of the actual rate of unemployment over the natural rate of unemployment indicates that there is a decline in production in the country. The drop in production led to the lag of the actual GNP from the potential GNP by 150 billion rubles.