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Economic Commentary

Okun's Law Revisited: Should We Worry about Low Unemployment?

The quotation above expresses a common, if not dominant, view of the genesis of inflationary pressure in an economy. The story goes something like this: High GDP growth eventually places excessive strain on a nation’s resources. This strain can become particularly acute in labor markets, where it is manifested as low unemployment. The labor market tightness associated with this low unemployment ultimately leads to higher prices.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Altig, David, Terry J. Fitzgerald, and Peter Rupert. 1997. “Okun's Law Revisited: Should We Worry about Low Unemployment?” Federal Reserve Bank of Cleveland, Economic Commentary 5/15/1997.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International