RT Journal Article
T1 The role of internal devaluation in correcting external deficits: The case of Spain
A1 Villanueva Cortés, Paloma
A1 Cárdenas Del Rey, Luis
A1 Uxó González, Jorge
A1 Álvarez Peralta, Ignacio
AB This paper carries out an ex-post evaluation of the internal devaluation policy in correcting external deficits. We examine to what extent and through which mechanisms the internal devaluation strategy implemented after 2010 is responsible for the readjustment in net exports in the case of Spain. Our analysis incorporates the effects linked to changes in external competitiveness and domestic prices and those associated with changes in income distribution. The main way in which internal devaluation contributed to external readjustment was through a decrease in domestic demand and imports rather than through enhanced external competitiveness. These demand effects derived from the distributive impact of changes in unit labor costs, which reduced the Spanish wage share during this period. According to our estimates, internal devaluation explains 33% of total external sector readjustment over the 2010-2018 period, 98% of which is driven by the demand effect, with the remaining 2% resulting from price effects.
PB Elsevier
SN 0954-349X
YR 2020
FD 2020
LK https://hdl.handle.net/20.500.14352/96395
UL https://hdl.handle.net/20.500.14352/96395
LA eng
NO Villanueva P, Cárdenas L, Uxó J, Álvarez I (2020) The role of internal devaluation in correcting external deficits: the case of Spain. Structural Change and Economic Dynamics 54: 282–296.
DS Docta Complutense
RD 7 jun 2025