Until recently, Spain was regarded as a country of moderate but persistent inflation. Indeed, after the long and sustained disinflation experienced from 1977 to 1987, Spain's inflation rate seemed to stabilize on a plateau between 4 percent and 6 percent (Figure 1), increasing with the overheating period in the end of the 1980s and decreasing with the slowdown of the early 1990s. Even in the wake of the severe recession of 1992-93, while unemployment increased by about 5 percentage points to exceed 24 percent of the labor force, inflation did not decline below 4 percent. As a consequence, inflation differentials between Spain and other countries of the European Monetary System remained significantly positive, contributing to the successive devaluations of the peseta until 1995, and to lingering doubts about Spain's qualification as a founding member of the European Monetary Union
Bibliography
Includes bibliographical references (page 30)
Notes
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