The Relevance of Supply Shocks for Inflation: The Spanish Case

This paper analyses the effects of supply shocks on the Spanish inflation rate. The methodology applied is based on Ball and Mankiw (1995). These authors assume that a good proxy for supply shocks is the third moment of the distribution of price changes, and show that nominal rigidities imply a positive relation between inflation and skewness, that is magnified by the variance of the distribution. The main data used are the monthly consumer price indexes of each region, disaggregated in 57 categories, for the 1993-2005 period. We estimate the relation between mean inflation and the higher moments of the distribution, including several control variables. The analysis has been carried out in two ways: firstly, each region is analysed separately and, secondly, we have used panel data techniques in order to test the homogeneity across regions. Our results point out that Spanish regions show a common pattern with regard to the nominal rigidities detected, and that the Spanish economy is vulnerable to supply shocks.Inflation, nominal rigidities, skewness, supply shocks, Spanish regions

Inflation and Supply Shocks in Spain: A Regional Approach

This paper analyses the effects of supply shocks on the Spanish inflation rate. Our goal is to determine if there is a homogeneous behaviour across regions with regard to that issue or if, on the contrary, there are regions more inflationary than others. In this sense, this paper tries to throw some light on the causes of the recent increase in the Spanish inflation rate and the relation of this fact with the evolution of oil prices. The methodology applied is based on the seminal paper of Ball and Mankiw (1995). Those authors assume that a good proxy for supply shocks is the third moment of the distribution of changes in relative prices, and show that for no trend inflation regimes the presence of nominal rigidities, like menu costs, implies a positive relationship between inflation and skewness -i.e., the supply shocks-, that is magnified by the variance of the distribution. In order to achieve these goals, we have chosen the 1993-2005 period, given that it fulfils the features required to apply the methodology above mentioned. The data used are the monthly consumer price indexes of each region, disaggregated in 57 categories. As a first stage, we have checked that the skewness of the distribution of changes in relative prices is a good proxy for supply shocks. After that, the relationship between inflation and the higher moments of the distribution is estimated. Moreover, control variables as interest rates and unemployment rates have been introduced. The analysis has been carried out in two ways. On one hand, each region is analysed separately and, on the other hand, we have used panel data techniques in order to test homogeneity across regions. Our results point out that Spanish regions show a common pattern with regard to inflation behaviour and that they are vulnerable to supply shocks.

Relative Prices and Inflation: New Evidence from Different Inflationary Contexts

This paper analyzes the relationship between inflation and relative price variability, in the direction of the latter, in two countries with very different inflationary experiences: Argentina and Spain. To address this objective, using disaggregated price indexes (Wholesale Price Index for Argentina and Consumer Price Index for Spain), we delimitate different inflationary regimes and compute a set of regressions for each country. Our results suggest evidence in favor of the non-neutrality of inflation (mostly in hyperinflation periods) and do not support neither the menu costs nor the signal extraction approaches. We also detect significant structural changes in the relationship depending on the inflationary regime.inflation, relative price variability, inflation regimes, inflation volatility,expected and unexpected inflation.

Relative Prices and Inflation: New Evidence from Different Inflationary Contexts

This paper carries out a comparative analysis of the inflation effects on relative price variability (RPV) in two economies with a inflationary experiences clearly different: Argentina and Spain. The results indicate non-neutrality of inflation, particularly in extreme inflation. The main determinants of RPV are the inflation rate, its variability, and unexpected inflation. Hence, our results neither supports the “menu-cost†approach -there are not monetary rigidities in high inflation-, nor the signal “extraction†approach, although the latter seems to be suitable for the Spanish case. In turn, we found significant structural changes in this relation in both countries, which suggest that the Inflation-RPV relation is different among different inflationary regimesInflationary regimes, Argentina, Spain

Differentials and persistence in unemployment - an analysis of the Spanish regions with the highest unemployment rates

The objective of the present paper is to contribute to the study of the labour markets of two Spanish regions that have mantained over the last few decades a persistent unemployment differential with respect to the remainder of the country: Andalusia and Extremadura. To this end, a brief descriptive analysis is given of the most important variables of these regional labour makets, together with the corresponding shift-share and virtual economy analysis. To study the degree of persistence of the unemployment rate in these two regions, the behaviour of their labour markets in response to specific shocks in employment is examined by means of a VAR analysis, following the method proposed by Blanchard y Katz (1992). One of the most noteworthy aspects brought out by the descriptive analysis was that, although the labour markets of Andalusia and Extremadura share many characteristics - indeed most of those that were analyzed- they also present differenciated patterns of behaviour in some important variables. For example, in the case of Andalusia economy, there is a notably strong growth of the labor force. This contrasts whit the weakness of employment growth in the Extremadura economy. Also worthy of note is the greater wage flexibility in Extremadura compared to Andalusia. From the VAR analysis applied to each of these two regions, one can conclude that a specific demand shock in Andalusia and Extremadura has permanent effects on the participation rate - especially in Andalusia- and on the unemployment rate - especially in Extremadura-, with the migratory movements in these regions being too low to return these variables to the level they had prior to the demand shock. In sum, the present paper points to a set of factors that could contribute to explaining the unemployment differentials of Andalusia and Extremadura relative to the rest of Spain. More specific analyses would be required to evaluate the explanatory capacity of each of these factors in accordance with the underlying methodology and theories corresponding to each case.

An Empirical Analysis of the Matching Process in the Spanish Public Employment Agencies: The Vacancies

Our work tries to assess the degree to which the matching process of the vacancies managed by the Andalusian public employment agencies (SAE) approaches a theoretical model of the stock-flow type as described by Coles (1994, CEPR) and his collaborators. According to this model, a new vacancy can be "good" (relatively scarce in its labour segment) or "bad" (relatively abundant in its labour segment); this unobservable heterogeneity at the aggregate level determines the probability of coverage of the vacancy and the characteristics of the worker who occupies it. For our study, we work with a sample of 3.565 vacancies registered in the SAE between March 2006 and October 2008. The proposed test requires the estimation of a duration model for the hazard rate of vacancies with multiple exits. A novelty of our test is that it does not require information about the entire stock and flow of candidates of the other side of the market. The main result obtained is the existence of certain evidence in favour of stock-flow matching.Public employment agencies, Matching, Vacancies, Duration models, Stock-flow model.

Inflation and Supply Shocks in Spain: A Regional Approach

This paper analyses the effects of supply shocks on the Spanish inflation rate. Our goal is to determine if there is a homogeneous behaviour across regions with regard to that issue or if, on the contrary, there are regions more inflationary than others. In this sense, this paper tries to throw some light on the causes of the recent increase in the Spanish inflation rate and the relation of this fact with the evolution of oil prices. The methodology applied is based on the seminal paper of Ball and Mankiw (1995). Those authors assume that a good proxy for supply shocks is the third moment of the distribution of changes in relative prices, and show that for no trend inflation regimes the presence of nominal rigidities, like menu costs, implies a positive relationship between inflation and skewness -i.e., the supply shocks-, that is magnified by the variance of the distribution. In order to achieve these goals, we have chosen the 1993-2005 period, given that it fulfils the features required to apply the methodology above mentioned. The data used are the monthly consumer price indexes of each region, disaggregated in 57 categories. As a first stage, we have checked that the skewness of the distribution of changes in relative prices is a good proxy for supply shocks. After that, the relationship between inflation and the higher moments of the distribution is estimated. Moreover, control variables as interest rates and unemployment rates have been introduced. The analysis has been carried out in two ways. On one hand, each region is analysed separately and, on the other hand, we have used panel data techniques in order to test homogeneity across regions. Our results point out that Spanish regions show a common pattern with regard to inflation behaviour and that they are vulnerable to supply shocks

¿Dónde está situada la NAIRU de la economía española?

Este trabajo está centrado en las estimaciones de la NAIRU (1) de la economía española. En él se comentan las principales características de las metodologías más frecuentemente aplicadas en este tipo de estimaciones: la metodología de Layard y Nickell, las técnicas SVAR y los métodos directos (curva de Phillips). De nuestra revisión se concluye que dado el estado actual de la investigación en esta área debemos ser muy prudentes a la hora de utilizar estas estimaciones para la gestión de la política económica, por la variedad de metodologías existentes y, especialmente, por apreciarse falta de robustez y elevada imprecisión; problemas a las que no parecen ajenas otras economías. Esta parcela del análisis macroeconómico reclama por tanto un esfuerzo de investigación adicional; en sentido esperamos que en los próximos años se potencie la aplicación de los métodos directos para la economía española

Las estimaciones del desempleo de equilibrio. Una panorámica

En este artículo abordamos una panorámica de las estimaciones del desempleo de equilibrio de la economía española realizadas desde mediados de los años ochenta hasta la actualidad. En primer lugar, exponemos sintéticamente en qué consisten los métodos más comúnmente empleados para medir el desempleo de equilibrio, señalando sus propiedades y limitaciones. Clasificamos los métodos en dos grupos, según se basen o no en la noción NAIRU. A continuación analizamos las estimaciones que hemos considerado más representativas para la economía española, agrupándolas básicamente en dos grandes bloques: las estimaciones basadas en la noción NAIRU y las recientes estimaciones que emplean la metodología VAR. En nuestro análisis de esos trabajos prestamos especial atención a sus características (marco teórico, método de estimación empleado, especificaciones, etc.) e implicaciones de política económica. Finalizamos con una serie de reflexiones de conjunto, que pretenden también arrojar alguna luz sobre los futuros desarrollos en este campo