La inflación latente en España: una perspectiva macroeconómica

Direct use of price indices does not enable to distinguish changes in relative prices from generalised price rises. Core inflation measures typically entail excluding some components or deriving trend measures. This paper uses a structural VAR with long-run identifying restrictions to arrive at two core measures: latent inflation and permanent inflation. Results for the 1970-1993 period show that inflation dynamics in Spain is strongly inertial and shocks with a permanent effect on output hardly affect inflation. Permanent nominal shocks play a major role in explaining inflation fluctuations.