Potential Growth and Business Cycle in the Spanish Economy: Implications for Fiscal Policy
An accurately estimation of the cyclical position of an economy is a necessary condition for the success of fiscal stabilisation policies. In this paper we show that the estimation of the output gap by means of decomposing a production function produces similar results to univariate and multivariate methods, increasing their robustness and allowing us to conclude that most of the information on the economic cycle is included in the cyclical component of the unemployment rate. The results also indicate that there is reduced uncertainty about the periods when the Spanish economy has clearly been in a deep recession or in a sharp expansion. These periods have been limited and of relatively short duration. Fiscal policy should pay particular attention to these episodes, when discretionary stabilisation policies make most sense.
|Date of creation:||Nov 2007|
|Date of revision:|
|Contact details of provider:|| Phone: +34 964 728590|
Fax: +34 964 728591
Web page: http://iei.uv.es
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:iei:wpaper:0705. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Investigación IEI)
If references are entirely missing, you can add them using this form.