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Spain Accession to the EMU - A Long and Hilly Road

Author

Listed:
  • Manuel Balmaseda

    (Research Department, Banco Bilbao Vizcaya Argentaria (BBVA))

  • Miguel Sebastián

    (Research Department, Banco Bilbao Vizcaya Argentaria (BBVA))

  • Patry Tello

    (Research Department, Banco Bilbao Vizcaya Argentaria (BBVA))

Abstract

Europe has been the driving force of economic policy in Spain over the last four decades and the key factor behind the modernisation and globalisation of the Spanish Economy. Being a founding member of the Economic and Monetary Union (EMU) marked the achievement of one of the key goals in the process of European integration. This process was carried out in several stages. First, trade openness, which was bolstered by Spanish accession to the EEC in 1986 and the single market in 1992, and foreign direct investment abroad and portfolio investment, which grew exponentially in the run-up to Euro membership. Second, the process of nominal convergence, which allowed a more stable macroeconomic framework. Lower inflation and fiscal consolidation have resulted in higher sustainable growth. However, the process of real integration could have been even more successful. Spain’s income per capita still lies at 84 per cent of the European average. The slow pace of reform, in particular in the labour market, with high labour costs leading to persistent unemployment, and an inappropriate policy-mix in the late 1980s prevented Spain from reaping the full benefits of integration and of EMU. Achieving real convergence is the key challenge facing the Spanish economy in the future and Europe will remain a focal point in this venture.

Suggested Citation

  • Manuel Balmaseda & Miguel Sebastián & Patry Tello, 2002. "Spain Accession to the EMU - A Long and Hilly Road," The Economic and Social Review, Economic and Social Studies, vol. 33(2), pages 195-222.
  • Handle: RePEc:eso:journl:v:33:y:2002:i:2:p:195-222
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    File URL: http://www.esr.ie/Vol33_2Balmaseda_.pdf
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    References listed on IDEAS

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    1. Andres, Javier & Hernando, Ignacio & Kruger, Malte, 1996. "Growth, inflation and the exchange rate regime," Economics Letters, Elsevier, vol. 53(1), pages 61-65, October.
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    3. Angel de la Fuente & Rafael Doménech, 2006. "Human Capital in Growth Regressions: How Much Difference Does Data Quality Make?," Journal of the European Economic Association, MIT Press, pages 1-36.
    4. Juan Dolado, 1999. "A Cost-Benefit Analysis of Going from Low Inflation to Price Stability in Spain," NBER Chapters,in: The Costs and Benefits of Price Stability, pages 95-132 National Bureau of Economic Research, Inc.
    5. Domenech, Rafael & Taguas, David & Varela, Juan, 2000. "The effects of budget deficit on national saving in the OECD," Economics Letters, Elsevier, vol. 69(3), pages 377-383, December.
    6. Javier Andrés & Ignacio Hernando, 1999. "Does Inflation Harm Economic Growth? Evidence from the OECD," NBER Chapters,in: The Costs and Benefits of Price Stability, pages 315-348 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ashoka Mody & Franziska L Ohnsorge, 2007. "Can Domestic Policies Influence Inflation?," IMF Working Papers 07/257, International Monetary Fund.
    2. Győrffy, Dóra, 2008. "Költségvetési kiigazítás és növekedés az Európai Unióban. Tanulságok Magyarország számára
      [Budget adjustment and growth in the European Union lessons for Hungary]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 962-986.

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