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Beating fiscal dominance. The case of Spain, 1874-1998

María Gadea (), Marcela Sabate () and Regina Escario ()

Documentos de Trabajo from Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza

Abstract: Despite the theoretical agreement on the inflationary effects of persistent deficits empirical work did not provide supporting evidence until the inclusion of non-developed countries in panel studies. This paper proposes an alternative approach, by exploiting the changes in development in a single country in the very long run, Spain over 1874-1998. As a main result, the use of different econometric tools shows that the causality from fiscal to monetary variables weakens as time goes by. More importantly, as in previous research, the intensity of the link markets, fiscal dominance holding until the easier access to foreign markets that followed its entry into the European Community in 1985.

Keywords: Fiscal dominance; money; financial development (search for similar items in EconPapers)
JEL-codes: E31 E52 H62 (search for similar items in EconPapers)
Date: 2008-08
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