Economic policy and output volatility in Spain, 1950-1998: was fiscal policy destabilizing?
- Document type
- Working Paper
- Battilossi, Stefano; Escario, Regina; Foreman-Peck, James
- Cardiff Business School
- Date of publication
- 1 July 2010
- Caediff Economics Working Papers
- Trends: economic, social and technology trends affecting business
- Business and management
- Material type
This paper estimates policy reaction functions and test the impact of fiscal shocks on growth volatility in Spain over the period 1950–1998. It finds that a transition from pro-cyclical to countercyclical fiscal policy occurred in the late years of the Franco regime, contributing to the stabilization of the growth pattern. The timing of the shift, between the late 1960s and early 1970s, was not determined by a single policy change, but rather by gradual pressure from economic liberalization, the external constraint imposed by a fixed exchange rate regime and the modernization of fiscal policy instruments. The aggressiveness of fiscal shocks also decreased over time, thus contributing to the progressive stabilization of output growth. There appears to be little necessity to appeal to a 'Great Moderation' of monetary policy to understand the greater stability of the Spanish economy from the 1980s.
Is this the ‘Version of Record (VoR)’?
Many different versions of a publication may be available on the web, only some of which might be considered part of the formal scholarly record. Please check whether this paper has been published in a journal by contacting the author, searching journal databases, or checking CrossMark.
Related to Trends: economic, social and technology trends affecting business
Downloadable briefing note looking at the relationship between productivity and pay growth
Downloadable paper on ensuring a fair future of work for women
Downloadable paper on how economic insecurity is experienced by workers