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The Time-Varying Long-Run Unemployment Rate: The Colombian Case

Author

Listed:
  • Luis Eduardo Arango

    ()

  • Carlos Esteban Posada

    ()

Abstract

The long-run component of the Colombian unemployment rate is estimated for the last twenty years. According to the results, the main determinants of the permanent component of the unemployment rate are the real hourly wage, the non-wage labor costs and the rate of capital accumulation. Given the statistical properties of the variables, a cointegration approach was adopted.

Suggested Citation

  • Luis Eduardo Arango & Carlos Esteban Posada, 2006. "The Time-Varying Long-Run Unemployment Rate: The Colombian Case," Borradores de Economia 389, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:borrec:389
    as

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    File URL: http://www.banrep.gov.co/docum/ftp/borra389.pdf
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    References listed on IDEAS

    as
    1. Francisco Javier LASSO VALDERRAMA, 2002. "Nueva metodología de Encuesta de hogares. ¿Más o menos desempleados?," ARCHIVOS DE ECONOMÍA 003282, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    2. Luis Eduardo Arango & Carlos Esteban Posada, 2001. "Unemployment Rate And The Real Wage Behavior: A Neoclassical Hint For The Colombian Labor Market Adjustment," BORRADORES DE ECONOMIA 003736, BANCO DE LA REPÚBLICA.
    3. Ana Maria Iregui & Jesus Otero, 2003. "On the dynamics of unemployment in a developing economy: Colombia," Applied Economics Letters, Taylor & Francis Journals, vol. 10(14), pages 895-898.
    4. Luis Arango & Carlos Posada, 2002. "Unemployment rate and the real wage behaviour: a neoclassical hint for the Colombian labour market adjustment," Applied Economics Letters, Taylor & Francis Journals, vol. 9(7), pages 425-428.
    5. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76, pages 678-678.
    6. Juan Manuel Julio, 2001. "How Uncertain are NAIRU Estimates in Colombia?," BORRADORES DE ECONOMIA 002798, BANCO DE LA REPÚBLICA.
    7. Franco Modigliani & Lucas Papademos, 1975. "Targets for Monetary Policy in the Coming Year," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 141-166.
    8. Jesús Antonio Bejarano RojasAuthor-Email: jbejarro@banrep.gov.co.Author-Homepage:, 2005. "Estimación estructural y análisis de la curva de Phillips neokeynesiana para Colombia," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 23(48), pages 64-117, Junio.
    9. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    10. Carl E. Walsh, 1998. "The natural rate, NAIRU, and monetary policy," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue sep18.
    11. Arturo Estrella & Frederic S. Mishkin, 1999. "Rethinking the Role of NAIRU in Monetary Policy: Implications of Model Formulation and Uncertainty," NBER Chapters,in: Monetary Policy Rules, pages 405-436 National Bureau of Economic Research, Inc.
    12. Luis Eduardo Arango & IREGUI, Ana María & MELO, Luis F., 2006. "Recent macroeconomic performance in colombia: what went wrong?," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, June.
    13. Laurence Ball & N. Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 115-136, Fall.
    14. Douglas O. Staiger & James H. Stock & Mark W. Watson, 1997. "How Precise Are Estimates of the Natural Rate of Unemployment?," NBER Chapters,in: Reducing Inflation: Motivation and Strategy, pages 195-246 National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Unemployment rate; labor costs; capital accumulation; cointegration;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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