Date 31/03/2010
Over the last year, it appears that the relationship between the business cycle and the labour market in Sweden has weakened. GDP fell heavily in 2009 without unemployment increasing as expected. In this commentary, the relationship between the business cycle and unemployment is estimated on the basis of Swedish data using Okun’s law. The estimate shows that the relationship varies over time and that a higher level of economic growth is needed today to change the level of unemployment compared to the average historical relationship. It also now takes longer before the full impact of a change in growth on unemployment becomes apparent.
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