Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146975
Authors: 
Pérez Caldentey, Esteban
Vernengo, Matías
Year of Publication: 
2015
Series/Report no.: 
Working Paper, Levy Economics Institute 847
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.
Subjects: 
Euro
Macroeconomic Crisis
Spain
JEL: 
F33
F45
O52
Document Type: 
Working Paper

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