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The Long-Run Effect of Permanent Disinflations


  • Javier Andrés
  • Ignacio Hernando
  • David López-Salido


This paper looks at the long term output effect of those monetary policies aimed at reducing inflation from its peak by late seventies, in nine major OECD countries. The estimated effect depends on the way nominal shocks are identified. Alternatively to the cross-country regression analysis we estimate a structural VAR model in output, inflation and unemployment.

Suggested Citation

  • Javier Andrés & Ignacio Hernando & David López-Salido, 1998. "The Long-Run Effect of Permanent Disinflations," Working Papers 9825, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:9825

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    References listed on IDEAS

    1. Kydland, Finn E & Prescott, Edward C, 1991. " The Econometrics of the General Equilibrium Approach to Business Cycles," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(2), pages 161-178.
    2. Luis A. Puch & Omar Licandro, 1997. "Are there any special features in the Spanish business cycle?," Investigaciones Economicas, Fundación SEPI, vol. 21(2), pages 361-394, May.
    3. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : II. New directions," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 309-341.
    4. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    5. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
    6. Christian Zimmermann, 1995. "International Trade over the Business Cycle: Stylized Facts and Remaining Puzzles," Cahiers de recherche CREFE / CREFE Working Papers 37, CREFE, Université du Québec à Montréal, revised Aug 1997.
    7. Wynne, Mark A. & Koo, Jahyeong, 1997. "Business cycles under monetary union: EU and US business cycles compared," Working Papers 9707, Federal Reserve Bank of Dallas.
    8. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
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    Cited by:

    1. Ángel Estrada & Ignacio Hernando & J. David López-Salido, 2000. "Measuring the NAIRU in the Spanish Economy," Working Papers 0009, Banco de España;Working Papers Homepage.
    2. Manuel Balmaseda & Miguel Sebastián & Patry Tello, 2002. "Spain Accession to the EMU - A Long and Hilly Road," The Economic and Social Review, Economic and Social Studies, vol. 33(2), pages 195-222.

    More about this item



    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity


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