Panel tests of Okun's Law for ten industrial countries

Ok-un's Law is one of the most enduring stylistic facts in macroeconomics. This article uses new developments in trend/cycle decomposition to test Okun's Law for a panel of ten industrial countries, finding that Okun's original estimate for the US. of three points of real GDP growth for each one percent reduction in the unemployment rate now averages just tinder two points of real GDP growth for the sample countries. Pooled estimates for Europe are smaller than estimates for the rest of the sample. Also, this article finds that omission of capital and labor inputs may have biased previous estimates.