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A New Phillips curve for Spain

In: Empirical studies of structural changes and inflation

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  • Jordi Galí

    (Bank of Spain)

  • J David López-Salido

    (Bank of Spain)

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.
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Suggested Citation

  • Jordi Galí & J David López-Salido, 2001. "A New Phillips curve for Spain," BIS Papers chapters, in: Bank for International Settlements (ed.), Empirical studies of structural changes and inflation, volume 3, pages 174-203, Bank for International Settlements.
  • Handle: RePEc:bis:bisbpc:03-07
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    Cited by:

    1. Bentolila, Samuel & Dolado, Juan J. & Jimeno, Juan F., 2008. "Does immigration affect the Phillips curve? Some evidence for Spain," European Economic Review, Elsevier, vol. 52(8), pages 1398-1423, November.
    2. Aurelijus Dabušinskas & Dmitry Kulikov, 2007. "New Keynesian Phillips curve for Estonia, Latvia and Lithuania," Bank of Estonia Working Papers 2007-07, Bank of Estonia, revised 26 Aug 2007.
    3. Lagoa, Sérgio, 2014. "Inflation dynamics in open economies: Empirical evidence for G7 countries on the role of import prices and the cost channel," Research in Economics, Elsevier, vol. 68(4), pages 354-371.
    4. Bjørnar Karlsen Kivedal, 2018. "A new Keynesian framework and wage and price dynamics in the USA," Empirical Economics, Springer, vol. 55(3), pages 1271-1289, November.
    5. International Monetary Fund, 2010. "Price Dynamics in China," IMF Working Papers 2010/221, International Monetary Fund.
    6. José Dorich, 2010. "Forward-looking versus backward-looking behavior in inflation dynamics: a new test," 2010 Meeting Papers 1020, Society for Economic Dynamics.
    7. Kavtaradze, Lasha, 2014. "Inflation Dynamics in Georgia," MPRA Paper 59966, University Library of Munich, Germany.
    8. Fabio Rumler, 2007. "Estimates of the Open Economy New Keynesian Phillips Curve for Euro Area Countries," Open Economies Review, Springer, vol. 18(4), pages 427-451, September.
    9. Nicoleta Ciurila & Bogdan Murarasu, 2008. "Inflation Dynamics in Romania - a New Keynesian Perspective," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 31-38.
    10. Campbell Leith & Jim Malley, 2007. "Estimated Open Economy New Keynesian Phillips Curves for the G7," Open Economies Review, Springer, vol. 18(4), pages 405-426, September.
    11. repec:onb:oenbwp:y::i:102:b:1 is not listed on IDEAS
    12. Hernán Rincón & Édgar Caicedo & Norberto Rodríguez, 2007. "Exchange rate pass-through effects: a disaggregate analysis of Colombian imports of manufactured goods," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 25(54), pages 90-121, June.
    13. Jishi Piao & Sangyong Joo, 2014. "Estimating Open Economy New Keynesian Phillips Curve for Korea," Asian Economic Journal, East Asian Economic Association, vol. 28(3), pages 239-258, September.
    14. Júlia Lendvai, 2005. "Hungarian Inflation Dynamics," MNB Occasional Papers 2005/46, Magyar Nemzeti Bank (Central Bank of Hungary).
    15. Ieva Rubene & Paolo Guarda, 2004. "The new Keynesian Phillips curve: empirical results for Luxembourg," BCL working papers 11, Central Bank of Luxembourg.
    16. Sigal Ribon, 2004. "A New Phillips Curve for Israel," Bank of Israel Working Papers 2004.11, Bank of Israel.
    17. Scheibe, Jörg & Vines, David, 2005. "A Phillips Curve for China," CEPR Discussion Papers 4957, C.E.P.R. Discussion Papers.
    18. Naoko Hara & Kazuhiro Hiraki & Yoshitaka Ichise, 2015. "Changing Exchange Rate Pass-Through in Japan: Does It Indicate Changing Pricing Behavior?," Bank of Japan Working Paper Series 15-E-4, Bank of Japan.
    19. Janko Gorter, 2005. "Subjective Expectations and New Keynesian Phillips Curves in Europe," DNB Working Papers 049, Netherlands Central Bank, Research Department.

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