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Crecimiento del PIB y desempleo: validez de la ley de Okun para Uruguay

Author

Listed:
  • Gabriel Merlo

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

  • Sylvina Porras

    (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)

Abstract

This research analyzes the validity of Okun's law for the Uruguayan economy. The estimation of the relationship between unemployment and GDP is done using two of Okun's original models: the differences model and the gap model (Okun I and Okun II, respectively) for the period 1968-2018. We concluded that regardless of the model or the filter used for the decomposition of the series, Okun's relationship is significant and takes the expected sign. On average, for every percentage point that GDP grows above its natural or potential level, the unemployment rate is reduced by approximately 0.27 percentage points. This result is in line with those obtained for other developing countries whose levels are generally below (in absolute value) than those estimated for developed countries. The analysis of the stability of the law based on rolling-windows estimates suggests that it is not possible with the evidence found so far to reject the stability hypothesis, which is relevant for the purposes of using the law to make macroeconomic projections.

Suggested Citation

  • Gabriel Merlo & Sylvina Porras, 2019. "Crecimiento del PIB y desempleo: validez de la ley de Okun para Uruguay," Documentos de Trabajo (working papers) 19-24, Instituto de Economía - IECON.
    • Handle: RePEc:ulr:wpaper:dt-24-19
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    File URL: https://hdl.handle.net/20.500.12008/23107
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    Cited by:

    1. M. Sylvina Porras-Arena & Mauricio A. Suárez Cal, 2021. "What’s behind Okun’s law? A multiple equation approach to the Uruguayan labour market," Documentos de Trabajo (working papers) 21-30, Instituto de Economía - IECON.

    More about this item

    Keywords

    Okuns’s law; unemployment; GDP growth;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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