Mistakes in the Fiscal Policy in Spain before the Crisis

Abstract

The paper analyses the mistakes made in the management of the fiscal policy in Spain before the crisis. The authors argue that the low size of the public expenditures, the adoption of a procyclical expansionary fiscal policy the years before the crisis, and the lack of a correct coordination between the Spanish fiscal policy and the ECB’s monetary policy, are key elements to understand the depth and length of the economic crisis and the current high fiscal imbalances in Spain.

Key words: Economic crisis, Fiscal policy, Macroeconomic policy, Spain, Stabilization policy.
JEL: E62, E65.