Peripheral Europe beyond the Troika: assessing the ‘success’ of structural reforms in driving the Spanish recovery

Luis Cárdenas, Paloma Villanueva, Ignacio Alvarez () and Jorge Uxó
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Luis Cárdenas: Department of Economic Analysis and Quantitative Economics, Complutense University of Madrid and Complutense Institute for International Studies (ICEI), Madrid, Spain
Paloma Villanueva: Complutense Institute for International Studies (ICEI), Madrid, Spain
Jorge Uxó: Department of Economic Analysis and Finance, University of Castilla–La Mancha (UCLM), Spain
Authors registered in the RePEc Author Service: Luis Cardenas del Rey

Review of Keynesian Economics, 2020, vol. 8, issue 4, 560–588

Abstract: Since 2014 the Spanish economy has recovered positive GDP growth, and the country has been growing well above the eurozone average. This recovery has sparked an academic and political debate concerning the role that structural reforms, prescribed by the ‘Troika,’ have played in peripheral Europe. For certain scholars and institutions, these structural reforms have allowed the market, through greater wage flexibility, to make the necessary adjustments to restore economic growth, resulting in a ‘healthy’ economic recovery. But to what extent is this mainstream narrative solidly backed up by the empirical evidence? Can Spain be held up as an international example of the ‘success’ of these reforms? The aim of this paper is to shed light on this debate. We consider that labor market reforms and wage devaluation policy are not the drivers of economic recovery. Instead, we offer an alternative explanation for recovery based on the theory of demand-led growth.

Keywords: Spain; demand-led growth; structural reforms; wage devaluation (search for similar items in EconPapers)
JEL-codes: E12 E60 J38 (search for similar items in EconPapers)
Date: 2020
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