Imbalances and Rebalancing in an Estimated Structural Model for Spain

Jan in 't Veld, Andrea Pagano, Rafal Raciborski, Marco Ratto and Werner Roeger
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Andrea Pagano: European Commission, Joint Research Centre (JRC)
Werner Roeger: European Commission, Directorate-General Economic and Financial Affairs

International Journal of Central Banking, 2015, vol. 11, issue 1, 1-41

Abstract: This paper uses an estimated DSGE model to analyze the factors behind the buildup of imbalances in the Spanish economy. Shock decompositions suggest that external imbalances have been able to build up mainly due to the reduction in real interest rates and easier access to credit following the elimination of the exchange rate risk premium. A rebalancing process in recent years with a sharp contraction in domestic demand has moved the trade balance back into surplus. The main driving factors were the collapse of the housing bubble and tightening of credit conditions.

JEL-codes: C54 E21 E62 F32 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2015:q:1:a:1

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