Arthur Melvin Okun

Arthur Okun was born on November 28, 1928, in Jersey City, New Jersey. He attended Columbia University and received his A.B. in 1949 and his Ph.D. in 1956. Okun went on to Yale University where he joined the economics department as an assistant professor between 1956 and 1960 and as an associate professor between 1960 and 1963, and finally becoming a full professor of economics in 1963. In 1961 he took a leave of absence to work for the Council of Economics Advisers, or CEA. While working at the CEA, he concentrated on projecting the Gross National Product, or GNP. From his work Okun developed “Okun’s Law,” which stated that for every thre percent rise in economic growth, unemployment declined one per cent. Okun’s Law successfully predicted the GNP until 1970, when the phenomena of stagflation began. Okun’s Law also provided a tangible rational for supporting massive tax cuts in 1963 and 1964 to help lagging demand. In 1964 Okun was made a member of the CEA and in January 1968 he was made the chairman. Okun was also a Keynesian economist, which meant he supported using the federal government and fiscal policy to maintain price stability. As Chairman of the CEA, Okun concentrated on combating inflation, which was made worse by the enormous amount of spending for Vietnam. He also was a major force in the government’s efforts to moderate industrial wage settlements and price increases, especially in the steel and automobile industries. In 1969 Okun left the CEA to take a position as a senior fellow at the Brookings Institute. Arthur Okun died from a heart attack on March 23, 1980.