Growth and unemployment: understanding Okun's law for Portugal

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

The goal of this research project is to study Okun’s Law for Portugal. This concept describes the relationship between GDP and unemployment. Through a Rolling Windows methodology it was possible to conclude that this relationship has not been stable and the correlation has been increasing over the years. There is also evidence of higher correlation during periods where GDP has grown less than the previous period. Nowadays, 1% GDP annual growth leads to a fall in the unemployment rate around 0.36%. Moreover, the information collected by this relationship is useful for short-run forecasting purposes.