Spain in the Euro: A General Equilibrium Analysis

47 Pages Posted: 20 Jan 2010

See all articles by Javier Andrés

Javier Andrés

University of Valencia - Department of Economics

Samuel Hurtado

Banco de España

Eva Ortega

Bank of Spain, DG Economics, Statistics and Research

Carlos Thomas

Banco de España

Date Written: December 23, 2009

Abstract

This paper analyzes the determinants of Spain's macroeconomic fluctuations since the inception of the euro in 1999, with a special attention to observed growth and inflation differentials with respect to the rest of the European Monetary Union (EMU). For that purpose we estimate the Banco de España DSGE model of the Spanish economy and the rest of the Eurosystem (BEMOD). We find that observed differentials are the result of a combination of asymmetric country-specific shocks (in particular, demand and productivity shocks for growth and cost-push shocks for inflation) as well as asymmetric economic structure (especially lower nominal wage and price rigidities in Spain). Finally, we find that EMU membership has had a non-negligible effect on observed differentials.

Keywords: DSGE model, monetary union, growth and inflation differentials, Bayesian inference

JEL Classification: C11, C51, E17

Suggested Citation

Andrés, Javier and Hurtado, Samuel and Ortega, Eva and Thomas, Carlos, Spain in the Euro: A General Equilibrium Analysis (December 23, 2009). Banco de Espana Working Paper No. 0927, Available at SSRN: https://ssrn.com/abstract=1538883 or http://dx.doi.org/10.2139/ssrn.1538883

Javier Andrés

University of Valencia - Department of Economics ( email )

E-46022 Valencia, Valencia E-46022
Spain
(34 96) 382 8260 (Phone)
(34 96) 382 8249 (Fax)

Samuel Hurtado

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

Eva Ortega (Contact Author)

Bank of Spain, DG Economics, Statistics and Research ( email )

Alcala 50
Madrid, 28014
Spain

HOME PAGE: http://https://www.bde.es/investigador/en/menu/people/research_staff_a/Ortega_Eslava__Eva.html

Carlos Thomas

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

HOME PAGE: http://www.bde.es

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