A New Phillips Curve for Spain

Jordi Galí and David Lopez-Salido

No 109, Working Papers from Banco de España

Abstract: In this paper we provide evidence on the fit of the New Phillips Curve (NPC) for Spain over the most recent disinflationary period (1980-1998). Some of the findings can be summarized as follows: (a) the NPC fits the data well; (b) yet, the backward looking component of inflation is important; (c) the degree of price stickiness implied by the estimates is plausible; (d) the use of independent information about prices on imported intermediate goods (which is influenced by the exchange rate) affects the measure of the firm's marginal costs and so inflation dynamics; and finally, (e) labor market frictions, as manifested in the behavior of the wage markup, appear to have also played a key role in shaping the behavior of marginal costs.

Pages: 45 pages
Date: 2001
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Citations: View citations in EconPapers (7)

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Chapter: A New Phillips curve for Spain (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0109

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