Salarios públicos, salarios privados e inflación dual

The paper analyses the transmission mechanism between prices and nominal wages to explain dual inflation in Spain for the 1964-1991 period. Using a vector autoregression, we find that private sector wages explain inflation and that public sector wages play a minor role. The explanatory power on inflation of exchange rate movements is considerably less important than that of wages. Interest rates and social securty contributions are also considered. We find that public sector wages do not have an impact on private sector wages.