Spanish unemployment and inflation persistence: ares there phillips trade-offs?

David Lopez-Salido and Juan Vega ()
Authors registered in the RePEc Author Service: Juan J. Dolado

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: This paper studies the joint dynamic behaviour of inflation and unemployment in Spain during the period 1964-1995. In particular, we analyze the implication of hysteresis and high inflation persistence for inference regarding Phillips trade-offs and sacrifice ratios in the Spanish economy, in response to a demand shock. To do so we use a Structural V AR approach with several identification outlines which give rise to different interpretations of the joint unemploymentinflation dynamics. When using a bivariate VAR we cannot reject the existent of a permanent output loss of half a percentage point for each percentage point of permanent disinflation. However, when the V AR is augmented in order to disentagle monetary from non-monetary shocks, within the demand class, the evidence favours a transitory trade-off with a cumulative output loss of about six percentage points of GDP.

Keywords: Philips; trade-offs; Sacrifice; ratios; Vectro; autroregressions; Shocks (search for similar items in EconPapers)
Date: 1997-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Spanish Unemployment and Inflation Persistence: Are There Phillips Trade-Offs? (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:6041

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