Disinflation in Spain: The Recent Experience
August 1, 1998
Download PDF
More Formats on IMF eLibrary
Order a Print CopyDisclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary
This paper investigates the causes of the recent disinflation in Spain. A standard Phillips curve model is used to disentangle the contributions of three possible shocks: an adverse demand shock that raises unemployment, a positive supply shock resulting from relative price adjustments or structural improvements in the labor market, and a credibility shock that lowers inflationary expectations. The main element underlying Spain’s recent disinflation appears to be a fall in inflation expectations, thanks to the country’s commitment to participate in Economic and Monetary Union from the start, and policy actions geared to that end.
Subject: Disinflation, Inflation, Labor, Output gap, Prices, Production, Real wages, Wage bargaining
Keywords: Disinflation, energy price inflation, Europe, food price inflation, Inflation, inflation expectation, inflation model, Output gap, output-inflation relationship, output-inflation tradeoff, Real wages, targeting inflation, Wage bargaining, WP, year-on-year inflation
Pages:
30
Volume:
1998
DOI:
Issue:
106
Series:
Working Paper No. 1998/106
Stock No:
WPIEA1061998
ISBN:
9781451852868
ISSN:
1018-5941
