Fiscal policy, structural reforms and external imbalances: a quantitative evaluation for Spain
Ángel Gavilán (),
Pablo Hernández de Cos,
Juan F Jimeno () and
Juan Rojas ()
Additional contact information
Ángel Gavilán: Banco de España
No 1107, Working Papers from Banco de España, Working Papers Homepage
This paper builds a large overlapping generations model of a small open economy featuring imperfect competition in the labor and product markets to understand i) which were the main determinants of the large expansionary phase experienced in Spain from the mid-1990s until the arrival of the global financial crisis in 2007-2008, ii) what role fiscal policy and structural reforms could have played to avoid the build-up of large external imbalance over this period, and iii) how these policies could affect the recovery of economic activity in Spain after the crisis. Our results indicate that falling interest rates and demographic changes were the main drivers of the Spanish expansionary phase. As for the macroeconomic behavior of the Spanish economy after the crisis, our results suggest that a front-loading in fiscal consolidation together with structural reforms that eliminate distortions in the goods and labor markets could make the recovery of economic activity in Spain more successful.
Keywords: overlapping generations; imperfect competition; fiscal consolidation; demographic change; structural reforms (search for similar items in EconPapers)
JEL-codes: E62 H30 J11 (search for similar items in EconPapers)
Pages: 53 pages
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed
Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... /11/Fich/dt1107e.pdf First version, April 2011 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1107
Access Statistics for this paper
More papers in Working Papers from Banco de España, Working Papers Homepage Contact information at EDIRC.
Bibliographic data for series maintained by María Beiro. Electronic Dissemination of Information Unit. Research Department. Banco de España ().