Abstract

ORTIZ, CARLOS HUMBERTO; JIMENEZ, DIANA MARCELA  and  UR IB E, JOSÉ IGNACIO. A reformulation of Okun's Law for Colombia. rev. econ. Caribe [online]. 2019, n.24, pp.26-48. ISSN 2011-2106.  https://doi.org/10.14482/ecoca.24.338.9861.

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.

JEL: E24, E32, E40, J23, J32, J64.

Keywords : Okun's law; unemployment; economic cycle; factor prices.

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