Spain’s Economic Crisis: Causes, Consequences, and Reforms
Causes of the Economic Meltdown
Spain experienced higher inflation rates than the Eurozone average due to:
- Loose monetary conditions (1996-2007)
- Accommodation of monetary policy
- Committed countercyclical fiscal policy
These policies led to greater fiscal effort, public sector surpluses, and containment of public expenditure.
Consequences of Joining the Eurozone
- Liquidity overhang
- Bubble in the housing market
- Risk premium plummeted
- Growth in real interest rates
- Strong domestic demand
- Increased imports, widening
International Trade: Tariffs, Barriers, Economic Integration & BOP Markets
Tariffs and Trade Barriers
Tariffs: A tool used by governments to protect local companies from outside competition. The most common forms are:
- Specific: Imposed on particular products, by either weight or volume, and usually stated in the local currency.
- Ad valorem: The charge is a straight percentage of the value of the goods (the import price).
- Discriminatory: A tariff charged against goods coming from a particular country. Except in special circumstances, such as anti-dumping duties, this is a violation
US Economy in the 1920s: Boom, Bust, and Depression
The Roaring Twenties
The role of the U.S. accelerated the growth of industrial production, accompanied by a profound change in the structure of its economy. The increase generated a growing surplus in its trade balance.
Economic Growth
The U.S. economic expansion was due to changing production dominated by technical innovation and changes in work organization.
There was also a high turnover in the energy sector, with an increase in electricity and oil.
Other sectors were consolidated that stimulated
Read MoreSpanish Public Budget: Phases, Principles, and Fiscal Balance
The development of the General State Budget (PGE) in Spain follows four key phases:
Preparation
In Spain, the budgeting process is the responsibility of the Government and the Ministry of Economy and Finance.
Discussion and Approval
Once developed, the budget proposals are presented to Parliament for approval.
Implementation
For implementation, the budget is separated into:
- Public Expenditure: The figures presented in the budgets are considered maximum and limiting.
- Revenues: These indicate the amounts
Economic Policy and Banking: Objectives and Functions
Economic Policy
Economic policy refers to the interference of government in the economic affairs of a country in order to achieve certain aims and objectives. These are provided by the public authorities and are based on constitutional principles and social preferences.
Aims
- Material well-being: Elevation of the overall standard of living for citizens.
- Equity: Equality before the law and the basic conditions of development.
- Peace and security: Defense against possible attacks.
- International agreements
Stock Market Indices and Monetary Policy: Understanding the Basics
Individual Stock Market Indices
Individual stock market indices in each bag define a general index that measures the performance of a representative set of values. When each session finishes, the overall index indicates whether purchases or sales have prevailed. In Spain, the stock index is the IBEX-35, which represents the 35 largest companies listed on Spanish stock exchanges.
The Stock Market
The stock market is a public service whose function is to facilitate the various negotiations of the values
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