We know from experience that weak economic growth increases the unemployment rate. In 1962 Okun proposed to measure … potential output in terms of unemployment gap. From this relation a direct link between increase in unemployment and output …

.p. over the annualized inflation); ii) a shock on the unemployment rate lasts for 18 months; iii) a shock on the expectations … has no effect over the unemployment rate. That is, more inflation does not reduce unemployment. …

Brazilian economy); and c) in the short-run both the unemployment rate and the exchange rate shock are not important …