Template-type: ReDIF-Paper 1.0  
Author-Name: Ignacio Álvarez
Author-Email: nacho.alvarez@icei.ucm.es
Author-Workplace-Name:  Departamento de Estructura Económica y Economía del Desarrollo, Universidad Autónoma de Madrid. Instituto Complutense 
	de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.
Author-Name: Jorge Uxó
Author-Email: Jorge.Uxo@uclm.es
Author-Workplace-Name: Departamento de Análisis Económico y Finanzas, Universidad de Castilla – La Mancha. Instituto Complutense de Estudios 
	Internacionales (ICEI). Universidad Complutense de Madrid.
Author-Name: Eladio Febrero
Author-Email: Eladio.Febrero@uclm.es
Author-Workplace-Name: Departamento de Análisis Económico y Finanzas, Universidad de Castilla – La Mancha. Instituto Complutense de Estudios 
	Internacionales (ICEI). Universidad Complutense de Madrid.
Title: Internal devaluation in a wage-led economy. The case of Spain
Abstract: 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.
Keywords:
 Distribution; Demand; Wage share; Bhaduri-Marglin model; Debt
Creation-Date: 2017
Length: 40 pages
Number: 1705
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/wpaper17-05.txt
File-URL: https://eprints.ucm.es/id/eprint/42692/1/WP%2005-17.pdf

File-Format: Application/pdf
File-Function: Full text
Handle: RePEc:ucm:wpaper:1705