Building on easy money:The political economy of housing bubbles in Ireland and Spain
AbstractThis paper undertakes a structured, focused case-study comparison of housing bubbles in Ireland and Spain, based on the selection of two most-different cases that nonetheless share a common outcome of interest. Both countries were exposed to the same set of changes in their international policy environment in the late 1990s and early 2000s, in the form of a low interest rate regime associated with the creation of European Monetary Union (EMU). The two countries have very different economic structures, different political decision-making profiles, and different relationships between the political and banking systems. Yet these two countries had the most extreme experience of housing bubbles during the 200os, and both suffered a similar construction-related economic collapse that ruined their respective banking systems after 2008. The paper argues that the decision-making taking place within their very different domestic institutional frameworks was subordinated to the fact that they shared a similar form of international vulnerability. Both were extremely open to mobile international capital during the 2000s. Their vulnerability to financialization resulted in a common experience of very rapid asset price inflation, which left both countries particularly exposed when the international financial collapse took place. The shared experience of European ‘peripherality’ meant that two countries belonging to different ‘varieties of capitalism’ ended up with very similar kinds of economic collapse.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Geary Institute, University College Dublin in its series Working Papers with number 201318.
Length: 57 pages
Date of creation: 08 Oct 2013
Date of revision:
housing bubbles; financial liberalization; credit; Ireland; Spain;
Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pedro Lains, 2008. "The Portuguese Economy in the Irish Mirror, 1960–2004," Open Economies Review, Springer, vol. 19(5), pages 667-683, November.
- Morgan Kelly, 2009. "The Irish Credit Bubble," Working Papers 200950, Geary Institute, University College Dublin.
- José Gabriel Palma, 2009. "The revenge of the market on the rentiers," Cambridge Journal of Economics, Oxford University Press, vol. 33(4), pages 829-869, July.
- Morgan Kelly, 2009. "The Irish Credit Bubble," Working Papers 200932, School Of Economics, University College Dublin.
- repec:esr:chaptr:jacb200505 is not listed on IDEAS
- Christophe André, 2010. "A Bird's Eye View of OECD Housing Markets," OECD Economics Department Working Papers 746, OECD Publishing.
- Michelle Norris & Menelaos Gkartzios, 2011. "Twenty years of property-led urban regeneration in Ireland: outputs, impacts, implications," Public Money & Management, Taylor & Francis Journals, vol. 31(4), pages 257-264, July.
- Callan, Tim & Walsh, John R. & Coleman, Kieran, 2005. "Tax Expenditures," Papers BP2006/3, Economic and Social Research Institute (ESRI).
- Sebastian Dellepiane Avellaneda & Niamh Hardiman, 2010. "The European Context of Ireland’s Economic Crisis," The Economic and Social Review, Economic and Social Studies, vol. 41(4), pages 473â500.
- Blánaid Clarke & Niamh Hardiman, 2012. "Crisis in the Irish Banking System," Working Papers 201203, Geary Institute, University College Dublin.
- repec:sae:niesru:v:211:y:2010:i:1:p:r27-r44 is not listed on IDEAS
- Niamh Hardiman, 2013. "Rethinking the political economy of fiscal consolidation in two recessions in Ireland," Working Papers 201316, Geary Institute, University College Dublin.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geary Tech).
If references are entirely missing, you can add them using this form.