Output trends and Okun's law
BIS Working Papers
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No
111
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01 April 2002
This paper estimates trend growth rates for a sample of industrial countries by
applying Okun's law in first differences. Despite the simplicity of the approach
and the restrictive assumptions, the method typically yields reasonable results
when trend shifts in the Okun coefficients and changes in structural
unemployment are allowed for. Particular caution is required in using the method
for estimating output gaps.