International the Okun’s law during the Covid-19 pandemic in Ecuador: a dynamic var model
Clasificación JEL: E24, 047, C01.
DOI:
https://doi.org/10.53591/fce.v7i9.2427Keywords:
unemployment, economic growth, vector autoregressive modelAbstract
This research aims to assess the relationship between unemployment and economic growth during the COVID-19 crisis in Ecuador from 2010 to 2022. We test the hypotheses of an inverse relationship between the variance of urban unemployment rate and real economic growth (Okun’s Law) using a Vector Autoregressive (VAR) dynamic model. The results show a bidirectional Granger causality between unemployment and real economic growth, and a negative response of urban unemployment from shocks in economic growth during the first and second periods. In summary, the findings of this study confirm the existence of Okun’s Law in Ecuador in the short time, without any cointegration equation, that could be a result of the negative effect of the COVID-19 pandemic.
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