Eppur si Muove! Spain: Growing without a Model
The purpose of this article is to analyze the growth of the Spanish economy since the advent of democracy until today. In the first part, the specificities of the growth model are analysed, showing that the empirical evidence is not consistent with the conclusions of the standard growth models (i.e. neoclassical growth model with exogenous TFP). More precisely, in the last 30 years Spain has experienced two long growth cycles which, far from being balanced, have shown major differences in the path of the relevant aggregated ratios. While the first cycle (1978-1993) showed a relatively small increase in employment and a considerable rise in productivity, the second cycle (1994-08) proved exactly the opposite: a spectacular increase in employment and a small gain in productivity. In the second part we develop a dynamic general equilibrium model of technology adoption dynamic à la Boldrin and Levine (2002), trying to account qualitatively for the main Spanish growth facts. We show that the characteristics of the labor market in Spain, with a dual system that protects permanent workers at the expense of temporary ones and an inefficient collective wage bargaining system have played a very relevant role in explaining the growth patterns of the last 30 years.