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Internal devaluation in a wage-led economy. The case of Spain



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Álvarez, Ignacio y Uxó, Jorge y Febrero, Eladio (2017) Internal devaluation in a wage-led economy. The case of Spain. [ Working Papers; nº 05, 2017, ISSN: 2530-0849 ]

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The aim of this paper is to use the theoretical distinction between wage-led and profit-led economies to consider the impact of internal devaluation policy on GDP growth for the case of Spain. We assess to what extent wage devaluation in Spain has proven useful vis-à-vis triggering an exportled strategy, boosting aggregate demand and overcoming the crisis. For said purpose, we estimate a Bhaduri-Marglin model drawing on quarterly data from Eurostat, and we expand the traditional model to take into account the effect of private debt on consumption and investment. Our main conclusion is that the Spanish economy can be characterized as a wage-led economy, and that therefore a wage share decrease proves counterproductive to growth. According to our calculations, internal devaluation policy detracted an average of 0.3 percentage points of annual economic growth during the period 2010-2016.

Tipo de documento:Documento de trabajo o Informe técnico
Palabras clave:Distribution; Demand; Wage share; Bhaduri-Marglin model; Debt
Palabras clave (otros idiomas):Distribución; Demanda; Participación salarial; Modelo de Bhaduri-Marglin; Deuda
Materias:Ciencias Sociales > Economía > Crisis económicas
Ciencias Sociales > Economía > Trabajo
JEL:E24, E25, E64
Título de serie o colección:Working Papers
Código ID:42692
Depositado:17 May 2017 09:18
Última Modificación:18 May 2017 07:58

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