Revisiting Okun's law for Mexico: an analysis of the permanent and transitory components of unemployment and output
AbstractUnlike usual estimation techniques, we follow Clark (1989) to estimate the correlation between the transitory components of unemployment and output as part of a system of correlations between the permanent and transitory components of both series. This model provides better estimate of the Okun’s Law and it takes into account the correlations that arise between the permanent and transitory components of unemployment and output within each series and across series. We find that the Okun’s coefficient for Mexican economy is significantly lower than previous estimates.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 30026.
Date of creation: 02 Mar 2011
Date of revision:
unobserved components; business cycles; labor market; Mexican economy;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-16 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edward S. Knotek & II, 2007. "How useful is Okun's law?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 73-103.
- Clark, Peter K, 1987. "The Cyclical Component of U.S. Economic Activity," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 797-814, November.
- Alcaraz Carlo, 2009. "Informal and Formal Labour Flexibility in Mexico," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
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