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The Spanish economic crisis: key factors and growth challenges in the euro area


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  • Eloísa Ortega

    (Banco de España)

  • Juan Peñalosa

    (Banco de España)

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    The economic crisis affecting the industrialised countries in recent years has been singular given its intensity, complexity and the difficulties in overcoming it. The aim of this paper is to analyse the determinants behind the crisis that have made it deeper and longer in Spain than in previous instances, and which have meant that there are significant obstacles to emerging from recession. Spanish EMU membership is a crucial aspect for consideration, as it contributes both to explaining the build-up of imbalances in the expansion and to conditioning the nature of the adjustment in the crisis, given that the range of economic policy instruments is significantly narrower in EMU. The macroeconomic and financial imbalances accumulated in the high-growth phase (the real estate boom, excess debt and the loss in competitiveness), which are all closely interlinked, were factors of vulnerability. But even apparently sounder fundamentals on other fronts, such as the budgetary and labour market situation, saw their weaknesses exposed in the crisis. The experience over the past four years allows some lessons to be drawn on the external sector, the real estate market, fiscal policy and the labour market. These lessons point in particular to the need to avoid complacency in economic policy management in boom periods and to the urgency of adapting the structure of goods and factor markets and the behaviour of economic agents in Spain to the requirements imposed by membership of a monetary union

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    File Function: First version, March 2012
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    Bibliographic Info

    Paper provided by Banco de Espa�a in its series Banco de Espa�a Occasional Papers with number 1201.

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    Length: 39 pages
    Date of creation: Mar 2012
    Date of revision:
    Publication status: Published also in Spanish, with the same number.
    Handle: RePEc:bde:opaper:1201

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    Related research

    Keywords: Spanish economy; EMU; economic crisis; competitiveness; real estate market; debt;

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    1. Sarai Criado & Adrian van Rixtel, 2008. "Structured finance and the financial turmoil of 2007-2008: and introductory overview," Banco de Espa�a Occasional Papers 0808, Banco de Espa�a.
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    Cited by:
    1. Antonio Estella, 2013. "Determinants of Spain’s decision to leave the European Monetary Union," EUI-RSCAS Working Papers 56, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    2. Antonio Estella, 2013. "Determinants of Spain's decision to leave the European Monetary Union," RSCAS Working Papers 2013/56, European University Institute.


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