Integration, Spurious Convergence, and Financial Fragility: A Post-Keynesian Interpretation of the Spanish Crisis

Esteban Perez Caldentey and Matías Vernengo

Economics Working Paper Archive from Levy Economics Institute

Abstract: The Spanish crisis is generally portrayed as resulting from excessive spending by households, associated with a housing bubble and/or excessive welfare spending beyond the economic possibilities of the country. We put forward a different hypothesis. We argue that the Spanish crisis resulted, in the main, from a widening deficit position in the nonfinancial corporate sector--the most important explanatory factor behind the country's rising external imbalance--and a declining trend in profitability under a regime of financial liberalization and loose and unregulated lending practices. This paper argues that the central cause of the crisis is related to the nonfinancial corporate sector's increasingly fragile financial position, which originated from the financial convergence that followed adoption of the euro.

Keywords: Euro; Macroeconomic Crisis; Spain (search for similar items in EconPapers)
JEL-codes: F33 F45 O52 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-eec and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.levyinstitute.org/pubs/wp_847.pdf (application/pdf)

Related works:
Journal Article: Integration, spurious convergence, and financial fragility: a post-Keynesian interpretation of the Spanish crisis (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lev:wrkpap:wp_847

Access Statistics for this paper

More papers in Economics Working Paper Archive from Levy Economics Institute
Bibliographic data for series maintained by Elizabeth Dunn ( this e-mail address is bad, please contact ).