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ACCOUNTING FOR SPANISH BUSINESS CYCLES

Published online by Cambridge University Press:  02 December 2014

Jesús Rodríguez López  and
Mario Solís García
Jesús Rodríguez López*
Affiliation:
Universidad Pablo de Olavide de Sevilla
Mario Solís García
Affiliation:
Macalester College
*
Address correspondence to: Jesús Rodríguez López, Departamento de Economía, Universidad Pablo de Olavide, Carretera de Utrera, 1, 41003 Sevilla, Spain; e-mail: jrodlop@upo.es.
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Abstract

We apply the business cycle accounting methodology proposed by Chari, Kehoe, and McGrattan to identify the sources of Spanish business fluctuations during two outstanding cyclical episodes: the recession alongside the transition to democracy in 1977 and the great recession of 2008. We find that the labor wedge played a key role during both recessions and that taxes and labor market institutions are likely behind the wedge movements. We conclude that any model that tries to understand the causes of recessions that occurred in the last three decades should focus on the labor wedge.

Keywords

Business Cycle AccountingEfficiency WedgeLabor WedgeInvestment Wedge
Type
Articles
Information
Macroeconomic Dynamics , Volume 20 , Issue 3 , April 2016 , pp. 685 - 714
Copyright
Copyright © Cambridge University Press 2014 

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López and García Supplementary Material

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