Some New Results on the Estimation of Structural Budget Balance for Spain

Pilar Poncela, Eva Senra (), Daniel Sotelsek () and Guido Zack
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Eva Senra: Universidad de Alcalá
Daniel Sotelsek: Universidad de Alcalá

Hacienda Pública Española / Review of Public Economics, 2014, vol. 210, issue 3, 11-31

Abstract: The recession that started in 2008 caused a sharp deterioration of the budget balance of Spain. This de-cline was not fully anticipated by the structural budget balance due to some methodology limitations. In this article, we calculate an alternative structural balance for Spain in the years prior to the subprime crisis that includes residential investment as an explanatory variable. This estimate shows that by 2004the Spanish fiscal situation was not as strong as presumed. This fragility was hidden by the extraordinary revenue from the real estate bubble and the construction boom.

Keywords: Crisis; structural budget balance; real estate bubble; construction boom; Spain. (search for similar items in EconPapers)
JEL-codes: C20 E32 E63 H62 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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