On Ricardian Equivalence and Twin Divergence

M. Cardoso and Rafael Domenech

Chapter 6 in The Spanish Economy, 2011, pp 144-159 from Palgrave Macmillan

Abstract: Abstract In 2007 the Spanish economy showed a large current account deficit (10 per cent of GDP), a public budget surplus (2.2 per cent of GDP), and a relatively low household saving rate (6.5 per cent of GDP), at least when compared with its investment rate (almost 10 per cent of GDP). However, with the economic crisis of 2008–9, the situation changed dramatically, as Figures 6.1, 6.2 and 6.3 show. The public budget surplus turned into a huge deficit, estimated at 11.2 per cent of GDP in 2009, the household saving rate increased enormously, to above 11 per cent of GDP, and the current account deficit, at 5.0 per cent of GDP in 2009, was correcting very quickly.1

Keywords: Monetary Policy; Current Account; Real Exchange Rate; Public Consumption; Public Investment (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30754-4_6

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DOI: 10.1057/9780230307544_6

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