Abstract

LORIA, Eduardo  and  SALAS, Emmanuel. Okun’s Law in Mexico, an Asymmetric Relationship, 2005.01-2021.10. Inv. Econ [online]. 2022, vol.81, n.321, pp.156-173.  Epub June 02, 2023. ISSN 0185-1667.  https://doi.org/10.22201/fe.01851667p.2022.321.82062.

The change in unemployment during economic contractions and expansions is very different. In contractions there is a rapid increase in unemployment and its reduction is slow in the phases of growth: easy to fire, hard to hire. With a Threshold model (Bai and Perron, 2003) we test asymmetries in the Okun’s law in Mexico with unemployment gap. This technique endogenously detects the threshold values that define the systems regimes. We find that GDP above -1.01% does not decrease the unemployment gap, but this gap increases when GDP falls more than that rate.

Keywords : Okun’s Law; asymmetry; unemployment; C24; E24; F43.

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