A reformulation of Okun’s Law for Colombia

Authors

  • Diana Marcela Jiménez Restrepo Profesora Titular - Departamento de Economía Facultad de Ciencias Sociales y Económicas Universidad del Valle
  • Carlos Humberto Ortiz Quevedo Profesor Titular - Departamento de Economía Facultad de Ciencias Sociales y Económicas Universidad del Valle
  • José Ignacio Uribe Profesor Jubilado - Departamento de Economía Facultad de Ciencias Sociales y Económicas Universidad del Valle

DOI:

https://doi.org/10.14482/ecoca.24.338.9861

Keywords:

Okun's law, unemployment, economic cycle, factor prices

Abstract

The main objective of this paper is to examine the behavior of unemployment related to the economic cycle and the relative prices of capital and labour. A theoretical model is set up which includes as determinants these variables. The cycle effect is negative and the prices effect is positive. The hypothesis is tested by using annual data from the Colombian main seven metropolitan areas for the 1983-2018 period. The econometric analyses do not reject the hypothesis. Consequently, not only is the labour remuneration relevant to the labor market, the cost of capital is also decisive.

Author Biographies

Diana Marcela Jiménez Restrepo, Profesora Titular - Departamento de Economía Facultad de Ciencias Sociales y Económicas Universidad del Valle

Profesora Titular - Departamento de EconomíaFacultad de Ciencias Sociales y EconómicasUniversidad del Valle

Carlos Humberto Ortiz Quevedo, Profesor Titular - Departamento de Economía Facultad de Ciencias Sociales y Económicas Universidad del Valle

PhD London School of Economics


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Published

2020-02-04

Issue

N°. 24: JUL-DEC 2019

Section

Science article

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