Panoeconomicus 2016 Volume 63, Issue 2, Pages: 195-210
https://doi.org/10.2298/PAN1602195M
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Lending Calling. Recession by over-indebtedness: Description and specific features of the Spanish case
Martín Antonio Sanabria (Complutense University of Madrid, Department of Applied Economics I, Madrid, Spain)
García Bibiana Medialdea (Complutense University of Madrid, Department of Applied Economics I, Madrid, Spain)
Following the approaches of Fisher, Koo, and in particular Minsky, this
article describes recent developments in the Spanish economy. These authors’
theories of financial fragility, and the extension of analysis of the
recession to also include the expansionary period, are very useful when it
comes to understanding the boom (1994-2008) and subsequent collapse of the
Spanish economy. Both processes are part of the same phenomenon: the binomial
relation between debt and the asset bubble, amplified by the use of external
financing, and the subsequent process of slow deleveraging. Alongside said
analytical elements, and considering Spain’s membership in the Eurozone
monetary union system, this characterisation of the euphoria and subsequent
balance-sheet recession further identifies specific features of the Spanish
economy that informed current outcomes.
Keywords: over-indebtedness, recession, deleveraging, Spain