Publications

This document presents a tool, available at the Banco de España, for forecasting General
government interest payments in Spain. Contrary to some models, which are very detailed
and take into account the specific characteristics and dates of every individual debt
instrument issued by the government, the tool presented here aggregates as much as
possible, for simplicity reasons, but without losing forecasting capacity, as it is shown in the
document. Also, the explanatory variables and the accounting approach used are chosen
to be consistent with the regular macroeconomic projection exercises of the Banco de
España, of which they are part.

This document describes the structure of the Spanish fiscal system in comparison with the
European Union economies. Spain is notable for the persistently lower weight of its tax
revenue relative to GDP compared with the EU28 average. This lower tax revenue/GDP
ratio is mainly due to indirect taxes (VAT, excise duties and environmental taxes); Spain
systematically has one of the lowest implicit tax rates relative to consumption in the EU28.
Regarding the taxation of labour, the attendant revenue relative to GDP is also lower than the
EU28 average, although the weight of social security contributions relative to GDP is higher, in particular the contributions charged on employees. The latter shows the lower fiscal pressure on labour income in respect of personal income tax in Spain. Spain evidences higher tax revenue on capital, in particular regarding wealth tax.

In highly decentralized countries the subnational dimension of economic developments acquires particular relevance, given the existence of potential spillover effects across jurisdictions or the existence of asymmetric impacts of national-wide macroeconomic shocks. At the same time, though, the analysis of sub-national macroeconomic and public finance short-term developments tend to be restricted in many countries due to data limitations. Against this backdrop, the aim of this paper is to provide an overview of the available data for monitoring macroeconomic and public finance developments at the regional level in Spain, and to present some examples of its practical use in real time. After a thoroughly review of the publicly available information, we identify two key informational gaps in this area of conjunctural analysis, namely: (i) the lack of homogeneous and official quarterly measures of aggregate regional economic activity (in particular, real GDP), and (ii) the limited sample size of time series pertaining to government budgetary developments at
the regional level.

Total factor productivity (TFP) is considered the key determinant of long-term and sustainable economic growth. The dismal evolution of TFP characterized the Spanish economy since the foundation of the Eurozone until the outbreak of the Global Financial Crisis [see García-Santana et al. (2016)]. This article provides an anatomy of the recent evolution of Spanish TFP using both aggregate- and micro-level data available until 2016. Three conclusions emerge from our findings: i) while TFP growth remained subdued during the crisis, a TFP revival is taking place over the last years; ii) this pattern is mostly driven by the rise and fall of the capital-to-labor ratio (capital deepening) while the role of labor productivity is more muted, and iii) an across-the-board increase in firms’ capital-to-labor ratios accounts for most of the TFP decline during the first years of the crisis, while the subsequent TFP revival is explained by the reallocation of resources towards firms with low capital deepening.

We analyze from an empirical point of view the evolution and determinants of Spanish
regional public debt. Spain offers an interesting case study because of its high level of fiscal
decentralization, implemented gradually during the past four decades, the parallel entry into
force of a number of national fiscal rules in that period, and the heterogeneity of its regions,
both in terms of economic fundamentals and some institutional features. Our main findings
are the following: i) regional governments’ fiscal policies reacted to public debt increases,
on average, over the sample of study; ii) fiscal rules played a limited role in controlling debt
surges, being only marginally effective in some instances, like high debt situations; iii) a
higher degree of regional fiscal co-responsibility tends to be linked to more subdued debt
dynamics; iv) market-disciple indicators have encouraged some discipline at the regional
level, and v) regional non-standard (commercial) debt surges present explanatory power on
the standard measure of public debt.

This document analyses the level of inequality in Spain and how it evolved over the course of the past crisis and the early stages of the current recovery. To this end, it first introduces the various dimensions of wage, income, consumption and wealth inequality, and analyses how they have developed. The analysis shows less wage dispersion in Spain than in other comparable economies, even after the crisis years, while the surge in unemployment during the period resulted in a high level of inequality in per capita income. The level of inequality in Spain is more moderate when total gross household income is analysed, decreasing during the crisis as a result of pensions developing more favourably than other sources of income, in conjunction with young people delaying setting up home. Inequality in per capita consumption rose during the crisis, particularly as a result of a decrease in expenditure on consumer durables by low-income households. Wealth inequality exceeds income inequality and increased during the downturn as a result of financial assets outperforming real assets. Nevertheless, Spain’s wealth inequality is moderate by international standards, as ownership of real assets is more widespread than in other countries. The way inequality has evolved during the early stages of the current economic recovery shows that falling unemployment has enabled a reduction in wage income inequality, as well as in per capita income inequality, albeit to a lesser extent.

The Spanish growth experience over the 1995-2007 period was characterized by the
remarkable surge in employment and investment as well as the dismal evolution of productivity.
These macroeconomic fluctuations were coupled with an unprecedented credit boom fueled
by a housing bubble. This article reviews a line of research that investigates the connection
between these developments using micro-level data on Spanish firms and banks. The evidence
suggests that the abundant availability of credit, partially induced by the real estate bubble,
and its propagation through the Spanish production network explain a sizable part of the
massive accumulation of labor and capital. Also, the deterioration in the allocation of resources
across firms is the main responsible of the fall in aggregate productivity. The allocation of
credit across firms and municipalities, the softening of banks lending standards, and the low
productivity of Spanish firms can partly explain this deterioration.

The Spanish Survey of Household Finances 2014 (EFF2014) provides detailed information
on the income, assets, debt and spending of Spanish households referring to end-2014.
Together with the previous waves of 2002, 2005, 2008 and 2011, the EFF2014 enables
the analysis of two complete phases of the economic cycle, which have had a strong
impact on the financial position of Spanish households. This paper provides a detailed
description of the most relevant methodological aspects in the design and implementation
of this fifth edition: the sample design, the questionnaire, the data collection process, the
validation of the data, the computation of weights and the imputation procedures. Important
characteristics also present in this wave are the oversampling of wealthy households and
the panel component of the sample.

The government debt-to-GDP ratios in the majority of euro area economies, including Spain, are at very high levels according to the available historical records. Economic research is conclusive in pointing out that bearing high levels of public debt ratios for an extended period of time can be damaging for economic growth. The economic literature also concludes that sustained high debt ratios create a source of vulnerability for the economy, in addition to lessening the stabilisation capacity of the public budget. Against this background, the reform of both the European Stability Pact and the Spanish budgetary stability law during the recent crisis strengthened the role of public debt in the budgetary framework. The simulations performed in this paper show that, under
plausible macroeconomic assumptions, the public deleveraging process required by the Sustainability Pact for Spain will still imply a significant fiscal consolidation effort that has
to be sustained over time.

The availability of a firm-level database that represents the productive sector of an economy at the aggregate level is a necessary condition to undertake both reliable policy analysis and economic research in multiple areas. In this paper, we document the construction of a new representative firm-level dataset for Spain using detailed micro-level information provided by firms to the Spanish Commercial Registry and the Bank of Spain. A comparison with National Accounts figures serves to illustrate that the new micro-dataset is able to replicate the growth rates of output, employment and wage bill of the private sector. Using official statistics from the National Institute of Statistics (INE), we show that the resulting dataset covers more than 80% of firms registered in the census over the years 2000-2013 and, more importantly, the resulting dataset replicates the firm size distribution of the Spanish non-financial market economy. The same representativeness analysis is done for the manufacturing sector indicating that this sector is particularly well-represented in the dataset.

This document describes the key aspects of the extended and revised version of Spain-STING (Spain, Short-Term INdicator of Growth), which is a tool used by the Banco de España for the short-term forecasting of the Spanish economy’s GDP and its demand components. Drawing on a broad set of indicators, several dynamic factor models are estimated. These models allow the forecasting of GDP, private consumption, public expenditure, investment in capital goods, construction investment, exports and imports in a consistent way. We assess the predictive power of the GDP and its demand components for the period 2005-2017. With regard to the GDP forecast, we find a slight improvement on the previous version of Spain-STING. As for the demand components, we show that our proposal is better than other possible time series models.