How Long is the Long Run? A Dynamic Analysis of the Spanish Business Cycle
IMF Working Papers, June 1, 1997
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- How Long is the Long Run? A Dynamic Analysis of the Spanish Business Cycle
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Bibliographic details
- Authors: J. Humberto Lopez, Stefania Fabrizio, Angel J. Ubide
- Published: June 1, 1997
- Series: IMF Working Papers
Summary and main findings
- The paper studies the sources of Spanish business cycles by modeling Spanish output as affected by two types of shocks:
- A shock with permanent long-run effects on output, identified as a supply shock.
- A shock with only transitory effects on output, identified as a demand shock.
- Spain appears to have long business cycles, of about 15 years.
- Restrictive demand policies to control the inflation rate could prove painful and disappointing.
- Supply-side policies aimed at reducing rigidities in the product and labor market are recommended as a better way to achieve inflation-control objectives.
Methodology and analytical approach
- The analysis treats output dynamics as driven by a permanent (supply) shock and a transitory (demand) shock.
- The paper uses econometric analysis consistent with Vector autoregression techniques (Vector autoregression is listed among the subjects/keywords).
- Topics covered in the analytic framework include: Business cycles, Econometric analysis, Economic growth, Economic theory, Inflation, Oil prices, Prices, Supply shocks.
Policy recommendations
- Favor supply-side reforms over restrictive demand-side policies to control inflation.
- Implement policies to reduce rigidities in the product market.
- Implement policies to reduce rigidities in the labor market.
Source: How Long is the Long Run? A Dynamic Analysis of the Spanish Business Cycle, IMF Working Paper No. 1997/074 (June 1, 1997).
Content in this bundle
- How Long is the Long Run? A Dynamic Analysis of the Spanish Business Cycle - WP/97/74