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Endogeneity of the natural rate of economic growth in Ecuador: 1970-2014

Author

Listed:
  • José Carrión Pesantez

    (Economista de la Universidad Técnica Particular de Loja.)

  • Diego Ochoa-Jiménez

    (Doctor en Economía de la Universidad de Alcalá. Profesor de Economía de la Universidad Técnica Particular de Loja, Ecuador.)

Abstract

The objective of this paper is to verify that the natural growth rate is determined endogenously - contrary to the theory - and likewise to estimate the sensitivity of this growth rate for the Ecuadorian economy in the 1970-2014 period. The methodology consists in using the approach of Ordinary Least Squares (OLS) presented by Johansen. The results suggest that for Ecuador, the natural rate, elementary to maintain constant levels of unemployment, increases during boom periods and on the contrary, it decreases during economic recessions due the labor force and productivity are pliable to demand.

Suggested Citation

  • José Carrión Pesantez & Diego Ochoa-Jiménez, 2018. "Endogeneity of the natural rate of economic growth in Ecuador: 1970-2014," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 43(45), pages 49-71, January-J.
    • Handle: RePEc:ula:econom:v:43:y:2018:i:45:p:49-71
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    References listed on IDEAS

    as
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    3. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    4. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1.
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    6. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
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    More about this item

    Keywords

    endogenous growth; Okun; productivity; labor force.;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General

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