Sacrifice rate and labour precariousness in Mexico, 2005Q1-2019Q4

Eduardo Loría () and Raúl Tirado ()

Revista Cuadernos de Economia, 2022, vol. 41, issue 87, 427-456

Abstract: Since 2005 the Mexican economy has registered four disinflationary episodes. We estimate six Phillips curves (OLS and ARDL), to evaluate the sacrifice rate in the GDP, in the unemployment rate, and in the Rate of Critical Labour Conditions (RCLC). Our contribution is that, by including labour precariousness in the New Keynesian Phillips Curve, augmented with the RCLC, inflation is more accurately modelled. We determine that labour precariousness has been the main disinflationary adjustment variable and we found that there are cointegrating relationships indicating that a one-point reduction in inflation increases the RCLC by 3.65 points in the long run. ****** Desde 2005 la economía mexicana ha presentado cuatro episodios desinflacionarios. Estimamos seis Curvas de Phillips para evaluar la tasa de sacrificio en el PIB, la tasa de desempleo y la tasa de condiciones críticas de ocupación (TCCO). Nuestra contribución es que al incluir la precariedad laboral en la Curva de Phillips, se modela la inflación con mayor precisión y que la precariedad laboral ha sido la principal variable de ajuste desinflacionario, encontramos relaciones de cointegración indicando que una reducción de un punto en la inflación incrementa en 3,65 puntos la TCCO en el largo plazo.

Keywords: New Keynesian Phillips Curve; labour precariousness; unemployment; disinflation; cointegration; ARDL; sacrifice rate. (search for similar items in EconPapers)
JEL-codes: C22 C52 E31 E63 J81 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:col:000093:020609

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