Okun’s Law in the Nordics

Abstract: Okun´s law describes the empirical observation first made by Arthur Okun relating changes in an economy’s unemployment rate to changes in output. Where many earlier research papers since then focus on comparisons between countries, this paper attempts to assess whether Okun’s law is demonstrated in the five Nordic countries and analyse the relationship between unemployment and output in welfare states. The results show a significant statistical relationship and hopefully present an interesting opportunity for further research.