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

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  • Eduardo Loría
  • Raúl Tirado

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.

Suggested Citation

  • Eduardo Loría & Raúl Tirado, 2022. "Sacrifice rate and labour precariousness in Mexico, 2005Q1-2019Q4," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 41(87), pages 427-456, December.
    • Handle: RePEc:col:000093:020609
    DOI: 10.15446/cuad.econ.v41n87.92783
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    More about this item

    Keywords

    New Keynesian Phillips Curve; labour precariousness; unemployment; disinflation; cointegration; ARDL; sacrifice rate.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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