NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Javier Andrés

Universidad de Valencia

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Institutional Affiliation: Universidad de Valencia

NBER Working Papers and Publications

June 2020Deciphering the Macroeconomic Effects of Internal Devaluations in a Monetary Union
with Óscar Arce, Jesús Fernández-Villaverde, Samuel Hurtado: w27347
We study the macroeconomic effects of internal devaluations undertaken by a periphery of countries belonging to a monetary union. We find that internal devaluations have large and positive output effects in the long run. Through an expectations channel, most of these effects carry over to the short run. Internal devaluations focused on goods markets reforms are generally more powerful in stimulating growth than reforms aimed at moderating wages, but the latter are less deflationary. For a monetary union with a periphery the size of the euro area's, the countries at the periphery benefit from internal devaluations even at the zero lower bound (ZLB) of the nominal interest rate. Nevertheless, when the ZLB binds, there is a case for a sequencing of reforms that prioritizes labor policies ove...
January 1999Does Inflation Harm Economic Growth? Evidence from the OECD
with Ignacio Hernando
in The Costs and Benefits of Price Stability, Martin Feldstein, editor
June 1997Does Inflation Harm Economic Growth? Evidence for the OECD
with Ignacio Hernando: w6062
The purpose of this paper is to study the correlation among growth and inflation at the OECD level, within the framework of the so-called convergence equations, and to discuss whether this correlation withstands a number of improvements in the empirical models, which try to address the most common criticisms of this evidence. The main findings are the following: 1) the negative correlation among growth and inflation is not explained by the experience of high-inflation economies; 2) the estimated costs of inflation are still significant once country-specific effects are allowed for in the empirical model; and 3) the observed correlation cannot be dismissed on the grounds of reverse causation (from GDP to inflation).

Published: The Costs and Effects of Price Stability. Feldstein, Martin, ed., Chicago: The University of Chicago Press, 1999, pp. 315-341.

 
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