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...

Do public sector wages exert presures on private sector wages, or has private sector a leadership role in wage setting?. This paper tries to isolate the pure signalling effect that one sector might exert on the other by controlling for other determinants of wages (prices, productivity,...