How Long is the Long Run? A Dynamic Analysis of the Spanish Business Cycle

Humberto Lopez, Stefania Fabrizio and Angel Ubide

No 1997/074, IMF Working Papers from International Monetary Fund

Abstract: This paper studies the sources of Spanish business cycles. It assumes that Spanish output is affected by two types of shocks. The first one has permanent long-run effects on output and it is identified as a supply shock. The second one has only transitory effects on output and it is identified as a demand shock. Spain seems to have long business cycles, of about 15 years. As 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 would be a better way to achieve the same objective.

Keywords: WP; growth rate; quantitative analysis; Shocks; Business Cycles; Sacrifice Ratio; inflation equation; supply and demand demand shock; per-capita output; inflation response; reducing inflation; Inflation; Supply shocks; Oil prices; Vector autoregression (search for similar items in EconPapers)
Pages: 31
Date: 1997-06-01
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Citations: View citations in EconPapers (5)

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