Vol. 3 No. 3 (2025)

  • Open Access

    Article

    Article ID: 3225

    The relationship between inflation and unemployment: Empirical evidence for Colombia (2007–2024)

    by Antonio María Martínez Reina

    Forum for Economic and Financial Studies, Vol.3, No.3, 2025;

    DOI: https://doi.org/10.59400/fefs3225

    The objective of this study was to analyze the relationship between inflation and unemployment to provide empirical evidence on the Phillips Curve in Colombia, using data from the National Administrative Department of Statistics (DANE) and the Bank of the Republic for the period 2007–2024. Descriptive statistical techniques, graphical analysis, correlograms, unit root tests, cointegration analysis, and estimation using the ordinary least squares (OLS) method were applied. The results revealed a negative relationship of −0.26 between inflation and unemployment, indicating that a 1% increase in unemployment reduces inflation by 0.26%. Furthermore, the unemployment gap was estimated at 0.34. The study concludes that the inverse relationship between inflation and unemployment remains stable, reflecting a trend toward stability in both the labor market and price levels over time. This inverse relationship in the Colombian context is primarily attributed to the pass-through of labor costs to the prices of goods and services.

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