When May Peseta Depreciations Fuel Inflation?

Enrique Alberola, Juan Ayuso and J. David López-Salido
Authors registered in the RePEc Author Service: J. David Lopez-Salido

Working Papers from Banco de España

Abstract: In this paper we consider that the relationship between nominal exchange rate and prices depends on the nature of the shocks impacting the economy. In order to identify the sources of nominal exchange rate and relative price fluctuations in Spain we impose long-run restrictions on the dynamics of these variables through a 2-variable and 3-variable SVAR, respectively. According to our results, supply and real demand shocks move nominal exchange rates and relative prices in opposite directions. Nominal shocks, however, move both variables in the same direction.

Keywords: EXCHANGE RATE; INFLATION (search for similar items in EconPapers)
JEL-codes: E31 F31 (search for similar items in EconPapers)
Pages: 34 pages
Date: 1997
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:9719

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