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Boom to Bust - Reconstructing the Spanish Economy Part 2: Policy Responses to the Economic Crisis

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  • Keith Salmon
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Original languageEnglish
Pages (from-to)83-91
Number of pages9
JournalInternational Journal of Iberian Studies
Volume23
Issue2
DOIs
Publication statusPublished - 1 Dec 2010

Abstract

Recession in Spain led to intervention by the government to stimulate the economy, a response that was replicated around the world. But as public finances deteriorated, financial markets and some policy makers demanded credible austerity measures (exit strategies) to reduce growing public sector debts. There was particular external pressure on Spain since any sovereign debt default would have serious repercussions at least throughout the European Union. Thus, from autumn 2009 stimulus measures began to be withdrawn and replaced by austerity ones. In addition, recession highlighted fundamental weaknesses in the Spanish economic model. Part one of this article (Salmon 2010) charted the passage of the Spanish economy into recession through examining key three features that were specific to Spain, the financial system, conditions in the property market, and the exceptional level of unemployment. The second part examines the macroeconomic policy measures taken in Spain and the outlook for a new economic model. It concludes that Spain had little alternative but to severely tighten fiscal policy and that a new economic model will be evolutionary rather than revolutionary

Notes

This document is the Accepted Manuscript version of the following article: Keith Salmon, ‘Boom to bust reconstructing the Spanish economy Part 2: Policy Responses to the Economic Crisis’, International Journal of Iberian Studies, Vol. 23 (2): 83-91, published 1 December 2010. The version of record is available online at doi: http://doi.org/10.1386/ijis.23.2.83_1 Publisher: Intellect

ID: 935583