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Some New Results on the Estimation of Structural Budget Balance for Spain

Author

Listed:
  • Pilar Poncela

    (Universidad Autónoma de Madrid)

  • Eva Senra

    (Universidad de Alcalá)

  • Daniel Sotelsek

    (Universidad de Alcalá)

  • Guido Zack

    (Universidad de Alcalá)

Abstract

The recession that started in 2008 caused a sharp deterioration of the budget balance of Spain. This de-cline was not fully anticipated by the structural budget balance due to some methodology limitations. In this article, we calculate an alternative structural balance for Spain in the years prior to the subprime crisis that includes residential investment as an explanatory variable. This estimate shows that by 2004the Spanish fiscal situation was not as strong as presumed. This fragility was hidden by the extraordinary revenue from the real estate bubble and the construction boom.

Suggested Citation

  • Pilar Poncela & Eva Senra & Daniel Sotelsek & Guido Zack, 2014. "Some New Results on the Estimation of Structural Budget Balance for Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 210(3), pages 11-31, September.
    • Handle: RePEc:hpe:journl:y:2014:v:210:i:3:p:11-31
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    References listed on IDEAS

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    Cited by:

    1. Francisco Martí & Javier J. Pérez, 2015. "Spanish Public Finances through the Financial Crisis," Fiscal Studies, Institute for Fiscal Studies, vol. 36, pages 527-554, December.
    2. Achim TRUGER & Michael NAGEL, 2016. "Austerity, Cyclical Adjustment and How to use the Remaining Leeway for Expansionary Fiscal Policies Within the Current EU Fiscal Framework," Turkish Economic Review, KSP Journals, vol. 3(2), pages 235-255, June.
    3. Jose Francisco Bellod Redondo, 2015. "Plan E: la estrategia keynesiana frente a la crisis en España," Revista de Economía Crítica, Asociación de Economía Crítica, vol. 20, pages 4-22.
    4. Achim Truger, 2015. "The Fiscal Compact, Cyclical Adjustment and the Remaining Leeway for Expansionary Fiscal Policies in the Euro Area," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 157-175, June.
    5. Truger, Achim, 2015. "Austerity, cyclical adjustment and the remaining leeway for expansionary fiscal policies within the current EU fiscal framework," IPE Working Papers 50/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    Crisis; structural budget balance; real estate bubble; construction boom; Spain.;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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