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Integration, spurious convergence, and financial fragility: a post-Keynesian interpretation of the Spanish crisis

Author

Listed:
  • Estaban Pérez Caldentey

    (Chief of the Financing for Development Unit (Economic Development Division), Economic Commission for Latin America and the Caribbean. Santiago, Chile.)

  • Matias Vernengo

    (Professor of Economics at Bucknell University (Lewisburg-PA, Estados Unidos))

Abstract

The Spanish Crisis is generally portrayed as resulting from excessive spending by households associated to a housing bubble and/or an excessive welfare spending beyond the economic possibilities of the country. We put forward a different hypothesis. We argue that the Spanish crisis resulted, in the main, from a widening deficit position in the non-financial corporate sector and a declining trend in profitability under a regime of financial liberalization and loose and unregulated lending practices. JEL Classification: F33; F45; O52.

Suggested Citation

  • Estaban Pérez Caldentey & Matias Vernengo, 2018. "Integration, spurious convergence, and financial fragility: a post-Keynesian interpretation of the Spanish crisis," Brazilian Journal of Political Economy, Center of Political Economy, vol. 38(2), pages 304-323, February.
    • Handle: RePEc:ekm:repojs:v:38:y:2018:i:2:id:95195
    DOI: 10.1590/0101-31572018v38n02a05
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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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