THE UNEMPLOYMENT – GROWTH RELATIONSHIP IN LITHUANIA
Keywords:economic growth, real gross domestic product, potential real gross domestic product, unemployment rate, Okun‘s law, Lithuania.
Adverse connection between the changes in real gross domestic product and changes in unemployment rate is widely known as Okun’s law. The law is important in both theoretical and practical approach. Therefore, analysis of the law attracts much of the attention in economic research.
In Lithuania researches in the link between the changes in real gross domestic product and changes in unemployment rate are scarce. In this paper growth of potential real GDP in Lithuania under Okun‘s law is estimated, and Okun‘s coefficient for Lithuania is calculated. The data in the analysis is taken for 1999-2008 year period from the Eurostat.
Statistical-econometric methods were used in the data analysis, regression and correlation coefficients were calculated. The results were compared with the results of the analogous researches in other countries. It was found that Okun‘s law, that relates unemployment rate with loss in real GDP, in Lithuania is of another character than in other countries in the 2000-2008 period.