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

Gabriel Merlo () and María Porras ()
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Gabriel Merlo: Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía

No 19-24, Documentos de Trabajo (working papers) from Instituto de Economia - IECON

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.

Keywords: Okuns’s law; unemployment; GDP growth (search for similar items in EconPapers)
JEL-codes: E23 E24 E26 J64 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-12
New Economics Papers: this item is included in nep-mac
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