Evaluating the Economic Growth and Unemployment with Emphasis on Okun's Law

Unemployment is the most controversial issue in our economy and finding solution to decline unemployment rate is the most important strategies for policy makers. In this regard attention to economic growth as a solution to decrease unemployment is taken into consideration so Okun's law is one of the achievements in this field which is explained negative relationship between unemployment and economic growth. In other words According to Okun’s law, a percentage increase in economic growth caused the unemployment rate to be reduced by 3%. In recent decades, many studies have been done on Okun's law and coefficients of Okun based on different aspects are evaluated. The result of studies on one hand indicates that the parameters, during time, vary from country to country, and region to region. In the other hand at some span of time this law has been violated. Violation of Okun's law shows a lack of proper modeling of behavior of economic variables. In this paper we use newest model named “coefficient constant and coefficient variable model” to estimate parameters of okun’s law with latest quarterly data which is released by Statistical Centre of IRAN. The results firstly indicate that unemployment has become structural unemployment. Secondly, maximum and minimum economic growth rate is 7.7 and 1.2 percent respectively.