RT Journal Article
T1 Internal devaluation in a wage-led economy: the case of Spain
A1 Álvarez, Ignacio
A1 Uxó González, Jorge
A1 Febrero Paños, Eladio
AB The aim of this paper is to study the impact of wage devaluation policy on the recent recovery experienced by the Spanish economy. For this purpose, we use the theoretical distinction between wage-led and profit-led economies. We address, for the first time in the literature, an in-depth analysis of the Spanish economy using the Bhaduri-Marglin model. We find that the Spanish economy can be characterized as a wage-led economy: a fall in the wage share has a contractionary effect on GDP growth. Our results point to two important conclusions, when we use this model to assess the internal devaluation policy. First, we do not see an export-led recovery in Spain during past years, driven by recent supply-side reforms. And, second, a pro-labour distribution of income would reinforce economic growth: according to our calculations, internal devaluation policy detracted an average of 0.2 percentage points of annual economic growth during the period 2009–17.
PB Oxford Academics
YR 2018
FD 2018-08-04
LK https://hdl.handle.net/20.500.14352/113149
UL https://hdl.handle.net/20.500.14352/113149
LA eng
NO ÁLVAREZ, I., UXÓ, J., FEBRERO, E. (2019): “Internal devaluation in a wage-led economy: The case of Spain”, Cambridge Journal of Economics, 43 (2), 335-360. https://doi.org/10.1093/cje/bey027
DS Docta Complutense
RD 12 abr 2025