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Beating fiscal dominance. The case of Spain, 1874-1998

Author

Listed:
  • María Dolores Gadea

    (University of Zaragoza)

  • Marcela Sabaté

    () (Department or Applied Economics. Faculty of Economics. University of Zaragoza)

  • Regina Escario

    (University of Zaragoza)

Abstract

Despite the theoretical agreement on the inflationary effects of persistent deficits empirical work did not provide supporting evidence until the inclusion of non-developed countries in panel studies. This paper proposes an alternative approach, by exploiting the changes in development in a single country in the very long run, Spain over 1874-1998. As a main result, the use of different econometric tools shows that the causality from fiscal to monetary variables weakens as time goes by. More importantly, as in previous research, the intensity of the link markets, fiscal dominance holding until the easier access to foreign markets that followed its entry into the European Community in 1985.

Suggested Citation

  • María Dolores Gadea & Marcela Sabaté & Regina Escario, 2008. "Beating fiscal dominance. The case of Spain, 1874-1998," Documentos de Trabajo dt2008-08, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  • Handle: RePEc:zar:wpaper:dt2008-08
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    File URL: http://www.dteconz.unizar.es/DT2008-08.pdf
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    References listed on IDEAS

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    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    2. Sabate, Marcela & Gadea, Maria Dolores & Escario, Regina, 2006. "Does fiscal policy influence monetary policy? The case of Spain, 1874-1935," Explorations in Economic History, Elsevier, vol. 43(2), pages 309-331, April.
    3. Catao, Luis A.V. & Terrones, Marco E., 2005. "Fiscal deficits and inflation," Journal of Monetary Economics, Elsevier, vol. 52(3), pages 529-554, April.
    4. Giannaros, Demetrios S. & Kolluri, Bharat R., 1985. "Deficit spending, money, and inflation: Some international empirical evidence," Journal of Macroeconomics, Elsevier, vol. 7(3), pages 401-417.
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    Cited by:

    1. Ana Yetano & Sonia Royo & Basisilo Acerete, 2009. "What is driving the increasing presence of citizen participation initiatives?," Documentos de Trabajo dt2009-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    2. Raúl Serrano & Marta Fernández-Olmos & Vicente Pinilla, 2015. "International diversification and performance in agri-food firms," Documentos de Trabajo dt2015-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    3. Matthias Morys, 2015. "Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939," Centre for Historical Economics and Related Research at York (CHERRY) Discussion Papers 15/01, CHERRY, c/o Department of Economics, University of York.
    4. Natividad Blasco & Pilar Corredor & Sandra Ferreruela, 2009. "Detecting intentional herding: what lies beneath intraday data in the spanish stock market," Documentos de Trabajo dt2009-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    5. M. T. Aparicio & I. Villanúa, 2012. "Selection criteria for overlapping binary Models," Documentos de Trabajo dt2012-01, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    6. Regina Escario & María Dolores Gadea & Marcela Sabaté, 2009. "Government Solvency or just Pseudo-Sustainability? a Long-Run Multicointegration Approach for Spain," Documentos de Trabajo dt2009-07, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    7. Matthias Morys, 2015. "Any lessons for today? Exchange-rate stabilisation in Greece and South-East Europe between economic and political objectives and fiscal reality, 1841-1939," Working Papers 0084, European Historical Economics Society (EHES).
    8. Arghyrou, Michael G. & Gadea, Maria Dolores, 2012. "The single monetary policy and domestic macro-fundamentals: Evidence from Spain," Journal of Policy Modeling, Elsevier, vol. 34(1), pages 16-34.
    9. Tunçer, Coşkun, 2012. "Monetary sovereignty during the classical gold standard era: the Ottoman Empire and Europe, 1880-1913," Economic History Working Papers 44725, London School of Economics and Political Science, Department of Economic History.

    More about this item

    Keywords

    Fiscal dominance; money; financial development;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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