IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Political Credit Cycles: The Case of the Eurozone

Listed author(s):
  • Jesús Fernández-Villaverde
  • Luis Garicano
  • Tano Santos

We study the mechanisms through which the entry into the euro delayed, rather than advanced, key economic reforms in the eurozone periphery and led to the deterioration of important institutions in these countries. We show that the abandonment of the reform process and the institutional deterioration, in turn, not only reduced their growth prospects but also fed back into financial conditions, prolonging the credit boom and delaying the response to the bubble when the speculative nature of the cycle was already evident. We analyze empirically the interrelation between the financial boom and the reform process in Greece, Spain, Ireland, and Portugal and, by way of contrast, in Germany, a country that did experience a reform process after the creation of the euro.

If 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.

File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.3.145
Download Restriction: no

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 27 (2013)
Issue (Month): 3 (Summer)
Pages: 145-166

as
in new window

Handle: RePEc:aea:jecper:v:27:y:2013:i:3:p:145-66
Note: DOI: 10.1257/jep.27.3.145
Contact details of provider: Web page: https://www.aeaweb.org/jep/
Email:


More information through EDIRC

Order Information: Web: https://www.aeaweb.org/subscribe.html

References listed on IDEAS
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.:

as
in new window

  1. Stéphane Bonhomme & Laura Hospido, 2012. "The cycle of earnings inequality: evidence from Spanish social security data," Working Papers 1225, Banco de España;Working Papers Homepage.
  2. Jesus Fernandez-Villaverde & Luis Garicano & Tano Santos, 2013. "Political Credit Cycles: The Case of the Euro Zone," NBER Working Papers 18899, National Bureau of Economic Research, Inc.
  3. Danthine, Jean-Pierre & Hunt, Jennifer, 1994. "Wage Bargaining Structure, Employment and Economic Integration," Economic Journal, Royal Economic Society, vol. 104(424), pages 528-541, May.
  4. Jacobi, Lena & Kluve, Jochen, 2007. "Before and after the Hartz reforms: The performance of active labour market policy in Germany," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 40(1), pages 45-64.
  5. Karl Whelan, 2009. "Policy lessons from Ireland’s latest depression," Working Papers 200914, School of Economics, University College Dublin.
  6. David Rae & Paul van den Noord, 2006. "Ireland's Housing Boom: What has Driven it and Have Prices Overshot?," OECD Economics Department Working Papers 492, OECD Publishing.
  7. Marco Battaglini & Stephen Coate, 2006. "A Dynamic Theory of Public Spending, Taxation and Debt," NBER Working Papers 12100, National Bureau of Economic Research, Inc.
  8. Reinhart, Carmen, 2009. "The Second Great Contraction," MPRA Paper 21485, University Library of Munich, Germany.
  9. Athanasios Vamvakidis, 2007. "External Debt and Economic Reform; Does a Pain Reliever Delay the Necessary Treatment?," IMF Working Papers 07/50, .
  10. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 1-78.
  11. Ernst R. Berndt & Charles R. Hulten, 2007. "Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches," NBER Books, National Bureau of Economic Research, Inc, number bern07-1, September.
  12. Philip Lane & Peter McQuade, 2013. "Domestic Credit Growth and International Capital Flows," The Institute for International Integration Studies Discussion Paper Series iiisdp428, IIIS.
  13. Libertad Gonzalez & Francesc Ortega, 2009. "Immigration and Housing Booms: Evidence from Spain," CReAM Discussion Paper Series 0919, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  14. V. V. Chari & Patrick J. Kehoe, 2008. "Time inconsistency and free-riding in a monetary union," Staff Report 308, Federal Reserve Bank of Minneapolis.
  15. Reinhart, Karmen & Rogoff, Kenneth, 2009. ""This time is different": panorama of eight centuries of financial crises," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 77-114, March.
  16. repec:iab:iabzaf:v:40:i:1:p:45-64 is not listed on IDEAS
  17. Michael Mitsopoulos & Theodore Pelagidis, 2011. "Understanding the Greek Crisis," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(1), pages 177-192, January.
  18. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
  19. Mary O'Mahony & Marcel P. Timmer, 2009. "Output, Input and Productivity Measures at the Industry Level: The EU KLEMS Database," Economic Journal, Royal Economic Society, vol. 119(538), pages 374-403, 06.
  20. Philip R. Lane, 2012. "The European Sovereign Debt Crisis," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 49-68, Summer.
  21. Francisco Torres, 2006. "A Convergência Monetária: Portugal e a União Europeia," Working Papers de Economia (Economics Working Papers) 39, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
  22. Barrett, Sean D, 1997. "The implications of the Ireland-UK airline deregulation for an EU internal market," Journal of Air Transport Management, Elsevier, vol. 3(2), pages 67-73.
  23. Carlos Marinheiro, 2006. "The sustainability of Portuguese fiscal policy from a historical perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 155-179, June.
  24. Owen O'Donnell & Platon Tinios, 2003. "The Politics of Pension Reform: Lessons from Public Attitudes in Greece," Political Studies, Political Studies Association, vol. 51(2), pages 262-281, 06.
  25. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830.
  26. R. A. Somerville, 2007. "Housing Tenure in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 38(1), pages 107-134.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:27:y:2013:i:3:p:145-66. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.