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A New Phillips Curve for Spain

Author

Listed:
  • Jordi Galí

    (Centre de Recerca en Economia Inrernacional (CREI))

  • David López-Salido

    (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.

Suggested Citation

  • Jordi Galí & David López-Salido, 2001. "A New Phillips Curve for Spain," Working Papers 0109, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:0109
    as

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/01/Fic/dt0109e.pdf
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    Other versions of this item:

    • 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.

    References listed on IDEAS

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    10. Dolado, J J & Malo de Molina, J L & Zabalza, A, 1986. "Spanish Industrial Unemployment: Some Explanatory Factors," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages 313-334, Supplemen.
    11. Cara S. Lown & Robert W. Rich, 1997. "Is there an inflation puzzle?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 51-77.
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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. Hernán Rincón & Édgar Caicedo & Norberto Rodríguez, 2007. "Exchange Rate Pass-Through Effects:A Disaggregate Analysis Of Colombianimports Of Manufactured Goods," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(54), pages 90-121, June.
    4. 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.
    5. Júlia Lendvai, 2005. "Hungarian Inflation Dynamics," MNB Occasional Papers 2005/46, Magyar Nemzeti Bank (Central Bank of Hungary).
    6. Ieva Rubene & Paolo Guarda, 2004. "The new Keynesian Phillips curve: empirical results for Luxembourg," BCL working papers 11, Central Bank of Luxembourg.
    7. Kavtaradze, Lasha, 2014. "Inflation Dynamics in Georgia," MPRA Paper 59966, University Library of Munich, Germany.
    8. 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.
    9. 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.
    10. Joerg Scheibe & David Vines, 2005. "A Phillips Curve For China," CAMA Working Papers 2005-02, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    11. 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.
    12. Fabio Rumler, 2005. "Estimates of the Open Economy New Keynesian Phillips Curve for Euro Area Countries," Working Papers 102, Oesterreichische Nationalbank (Austrian Central Bank).
    13. Hernán Rincón & Édgar Caicedo & Norberto Rodríguez, 2007. "Exchange Rate Pass-Through Effects:A Disaggregate Analysis Of Colombianimports Of Manufactured Goods," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 25(54), pages 90-121, June.
    14. 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.
    15. repec:onb:oenbwp:y::i:102:b:1 is not listed on IDEAS
    16. 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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