Occasional Papers

The Occasional Papers series seeks to disseminate the work carried out by the Banco de España within its sphere of competence that is considered to be of general interest for knowledge of the functioning of the Spanish economy and of its international environment.

The opinions and analyses published in the Occasional Papers are the responsibility of the authors and are not necessarily shared by the Banco de España or the Eurosystem.

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  • 30/12/2020
    2033. The Spanish survey of household finances (EFF): description and methods of the 2017 wave. (485 KB) Cristina Barceló, Laura Crespo, Sandra García-Uribe, Carlos Gento, Marina Gómez and Alicia de Quinto

    The Spanish Survey of Household Finances 2017 (EFF2017) provides detailed information on the income, assets, debt and spending of Spanish households referring to end-2017. Together with the previous waves of 2002, 2005, 2008, 2011 and 2014, the EFF2017 enables the analysis of several phases of the recent economic cycle and of the related developments in Spanish households’ financial position. This paper provides a detailed description of the most relevant methodological aspects in the design and implementation of this sixth 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.

  • 30/12/2020
    2032. Contingency public funds for emergencies: the lessons from the international experience (1 MB) Júlia Brunet, Lucía Cuadro-Sáez and Javier J. Pérez

    Should societies (governments) save during economic expansions in order to cover the costs of extraordinary situations, such as natural or biological catastrophes or, more generally, economic crises? This question has been raised once again by the economic and social crisis linked to the confinement measures implemented to control the spread of the COVID-19 pandemic and the enormous public spending required to mitigate its impact. There are two general approaches in the economic literature to this debate, which are not mutually exclusive. First, the more standard approach indicates that governments, in these situations, should resort to borrowing. This allows the impact of shocks to be smoothed over time, as long as governments are sufficiently disciplined to rebuild the necessary room for manoeuvre during upswings. However, the evidence available shows that debt tends to decline only very gradually in post-crisis periods. Under the second approach, governments build up contingency funds or rainy-day funds during economic booms. International experience has numerous examples of national and regional funds of this type. This paper reviews the experience of such funds, with a view to drawing lessons as to their potential usefulness as an instrument of support in crisis situations and fiscal emergencies. Although the international evidence on their use is highly heterogeneous, it shows that when these funds are appropriately structured and sufficiently large they contribute to mitigating the impact of shocks and improving fiscal discipline.

  • 29/12/2020
    2031. Firms and households during the pandemic: what do we learn from their electricity consumption? (2 MB) Olympia Bover, Natalia Fabra, Sandra García-Uribe, Aitor Lacuesta and Roberto Ramos

    We analyze the impact of the COVID-19 pandemic on electricity consumption patterns in Spain. We highlight the importance of decomposing total electricity consumption into consumption by firms and by households to better understand the economic and social impacts of the crisis. While electricity demand by firms has fallen substantially, the demand by households has gone up. In particular, during the total lockdown, these effects reached -29% and +10% respectively, controlling for temperature and seasonality. While the electricity demand reductions during the second wave were milder, the demand by firms remained 5% below its normal levels. We also document a change in people’s daily routines in response to the stringency of the lockdown measures, as reflected in their hourly electricity consumption patterns.

  • 13/11/2020
    2030. Juan Sebastián Elcano: 500 años de la Primera vuelta al mundo en los billetes del Banco de España. Historia y tecnología del billete (11 MB) Ángel Gómez-Carreño García-Moreno

    This paper guides us through a historic feat: the first circumnavigation of the Earth, completed by Juan Sebastián Elcano. 2021 marks the 500th anniversary of this heroic voyage, which was the result of the expedition to the Moluccas initiated by Ferdinand Magellan (1519-1521). To commemorate this historic event, the Banco de España, with its vast banknote collection, is conducting an informative study aimed at disseminating the strong link between technology and banknote production. In this case, it focuses on two very specific historical banknotes. Firstly, the 500-peseta banknote of the April 25, 1931 series and, secondly, the five-peseta banknote of the March 5, 1948 series. Both are devoted to the Getaria-born captain, thus enshrining him as one of Spain’s most important historical figures. The composition of both banknotes, their security features and the printing technologies used are studied in detail. Through an historiographical lens, an overview of the historical context and reason for the expedition and the way in which it unfolded is also provided.

  • 13/11/2020
    2029. Analysis of insolvency proceedings in Spain against the backdrop of the COVID-19 crisis: insolvency proceedings, pre-insolvency arrangements and the insolvency moratorium (579 KB) Miguel García-Posada Gómez

    The inefficiency of Spanish insolvency proceedings – evidenced by their length and reflected
    in the fact that non-financial corporations and sole proprietors make limited use of both
    insolvency proceedings and pre-insolvency arrangements – is a structural shortcoming of
    the Spanish economy. It is a problem that has become particularly important against the
    backdrop of the COVID-19 crisis and the severe impact it is having on the financial situation
    of Spanish firms, despite the broad range of public measures introduced to mitigate it. This
    document analyses the functioning of the insolvency system, examines the pros and cons
    of the insolvency moratorium currently in place and proposes various alternatives that could
    make the system more efficient when the moratorium expires at the end of the year.

  • 25/11/2020
    2028. The effects of changes in the composition of employment on euro area wage growth: panel data analysis (897 KB) Ángel Luis Gómez

    In the euro area, the composition of employment has changed significantly since the
    onset of the financial crisis, particularly in terms of employees’ age and educational level,
    in addition to the incidence of temporary contracts. This paper exploits two new panel
    datasets to estimate the extent to which changes in the composition of employment
    were behind weak wage growth in the euro area and in its main member countries during
    the economic recovery following the financial crisis. This type of analysis, which follows the
    same individual over several periods of time, allows the effect of individual productivity to be
    treated econometrically and certain biases that could affect the use of cross-sectional data
    to be avoided. It is concluded that changes in the composition of employment had some
    positive effect on wages in the euro area between 2010 and 2012. However, from 2013
    until 2017, the last period for which microdata are available, this effect turned negative and
    increased in magnitude, dampening aggregate wage growth. In the last two years the effect
    was particularly significant, with an impact of around 1 percentage point. Correcting for the
    effect of changes in the composition of employment on wages leads to a closer relationship
    between wages and cyclical conditions.

  • 18/11/2020
    2027. Tendencias recientes de la población en las áeras rurales y urbanas de España (2 MB) Eduardo Gutiérrez, Enrique Moral-Benito and Roberto Ramos

    In the period 1950-2018, the share of the population living in urban areas in Spain increased from 65% to more than 87%. This increase was especially strong until the end of the 1970s, during the period that is sometimes dubbed the rural exodus, with this share reaching 82% in 1981. Since then, the share of the urban population has continued to rise, albeit at a significantly slower pace, as a result of uneven population dynamics across rural and urban areas. Urban areas experienced strong demographic momentum from the end of the 20th century to 2011, but have subsequently stalled. By contrast, although the rural population increased until 2010, rural areas have undergone steep population declines since then. However, the population dynamics across rural areas are markedly uneven based on their size and whether or not they belong to a functional urban area. Specifically, very small rural areas (fewer than 1,000 inhabitants) have undergone steep population declines in recent decades. Furthermore, the natural population decrease in rural areas, a consequence of a population structure skewed towards older cohorts, is noteworthy. Conversely, rural areas belonging to a functional urban area have experienced significant natural population increases in recent years. In the period elapsed since the mid-20th century, the increase in the share of the urban population in Spain was among the largest in Europe, such that the percentage has converged with that observed in Europe’s most urbanised countries.

  • 05/10/2020
    2026. The ECB monetary policy response to the COVID-19 crisis (596 KB) Pablo Aguilar, Óscar Arce, Samuel Hurtado, Jaime Martínez-Martín, Galo Nuño and Carlos Thomas

    The ECB has responded forcefully to the challenges posed by the COVID-19 crisis for the euro area economy. This paper reviews the different monetary policy measures adopted by the ECB since the COVID-19 outbreak and explains their rationale. It also looks at several analyses of the impact of some of the main measures on both the Spanish economy and that of the euro area as a whole.

  • 29/09/2020
    2025. Central bank currency swap lines (741 KB) Enrique Esteban García-Escudero and Elisa J. Sánchez Pérez

    As the US dollar plays a pivotal role in international trade and financial markets, non-US banks’ reliance on short-term wholesale funding markets (such as repo, commercial paper, certificate of deposit and swap markets) to finance their dollar assets makes them especially vulnerable to shocks in these markets, such as those arising from the global financial and COVID-19 crises. The crisis management mechanisms in place before the global financial crisis (the International Monetary Fund and international reserves) were overwhelmed by it.Only the rapid deployment of an international currency swap network, as a result of policy cooperation between the main global central banks, allowed equilibrium between dollar supply and demand to be restored and the severest consequences of the market strains for non-US banks to be avoided.

  • 11/09/2020
    2024. The main post-pandemic challenges for the Spanish economy. Appearance before the Parliamentary Committee for the Economic and Social Reconstruction of Spain after COVID-19. Congress of Deputies – 23 June 2020 (1 MB) Pablo Hernández de Cos

    The COVID-19 crisis has elicited an immediate and forceful economic policy response.
    With the height of the crisis behind us, the Governor has set out priority economic measures
    for the post-lockdown phase. He calls for the urgent launch of an ambitious, comprehensive,
    permanent and assessable strategy of structural reforms and fiscal consolidation.
    In this second, gradual-recovery phase, laying the foundations for sustainable and balanced
    growth will involve the economic policy response combining two objectives: to support the
    recovery and to provide for structural adjustment. And, in this scenario, public finances
    sustainability must be ensured.
    Three elements are needed to boost the credibility and effectiveness of this initial response
    and of the entire reform strategy. First, the fiscal expansion in the short term should go
    hand-in-hand with a plan to restore health to public finances in the medium term, once the
    economy resumes a sound growth path. Second, structural reforms should be expedited so
    they positively affect spending, investment and hiring decisions in the very short term. And
    third, political consensus must ensure the durability of the strategy over several legislatures.
    In the short run, the policies supporting the recovery should be attuned to the health situation and economic circumstances. That will involve maintaining monetary and financial measures geared to preserving appropriate access to financing. It will further entail extending and recalibrating income support and furlough schemes. New measures will also be needed, namely: active labour market and training policies for the unemployed; enhanced business restructuring and insolvency procedures; and a fiscal impulse for the restructuring of the productive system through investment in technological capital, education and training.
    In the medium term, the Spanish economy’s main challenges will determine the structural
    reform agenda needed to increase our potential growth over the coming years. The paper
    details the measures on this agenda in response to each of the challenges identified:
    i) to improve productivity dynamics (promotion of business dynamics and growth, increased
    sectoral competition, enhanced human capital and an increase in technological capital);
    ii) to reduce unemployment and job insecurity (with a lower temporary employment ratio and
    active labour market policies); iii) to address population ageing (pensions system reform);
    iv) to bolster inclusion policies (minimum living income and housing affordability); v) to smooth the transition to a more sustainable economy (via fiscal policy and the financial system); vi) to maintain a healthy financial sector; vii) to tackle new challenges (globalisation and digitalisation); viii) to drive forward European governance reform (an appropriate European recovery fund, headway in the fiscal union, Stability and Growth Pact reform, completion of the Banking Union and a genuine Capital Markets Union); and ix) to ensure the sustainability of public finances (an ambitious multi-year fiscal consolidation programme).

  • 31/08/2020
    2023. The Spanish economy and the COVID-19 crisis. Appearance before the Parliamentary Economic Affairs and Digital Transformation Committee – 18 May 2020 (1 MB) Pablo Hernández de Cos

    The coronavirus pandemic has placed our economy in an unprecedented situation. The
    adverse shock has been on an enormous scale and truly global in nature, and while it is
    foreseeably temporary it has the potential to cause structural harm. Certain characteristics
    of our economy – the sectoral specialisation of our productive system, the small average
    size of firms and the high temporary employment ratio – make it more vulnerable than other
    countries to this shock.
    This situation initially calls for immediate and forceful economic policies. These should
    be time-limited – until employment and economic activity regain momentum following the
    shutdown imposed – and internationally coordinated. The aim is to alleviate the loss of
    income of the households and firms affected by the crisis and to prevent a temporary shock
    from causing persistent effects over time. And in this connection, fiscal policy is the most
    suitable tool. Monetary policy should also operate actively to ensure appropriate financing
    and liquidity conditions for economic agents. Micro- and macroprudential policies should
    spur financial institutions to continue to see that lending reaches households and firms
    and, in turn, they should preserve the system’s financial stability. Moreover, the crisis, as
    it is global, requires an internationally coordinated response. At the European level, a joint
    response is imperative, underpinned by a financial resources- and risk-sharing mechanism,
    and a complete Banking Union.
    Once the height of this crisis is behind us, economic policies should essentially tackle the
    following challenges: to reduce the structural deficit and public debt, and to promote longterm growth. The strategy should rest on twin programmes: a medium-term budgetary
    consolidation programme which, through a review of spending and of the tax structure
    and capacity, enables health to be restored to our public finances; and a structural reforms
    programme that raises economic growth capacity, with particular attention to enhancing
    human capital and efficient R&D expenditure.

  • 25/08/2020
    2022. Containment measures, employment and the spread of COVID-19 in Spanish municipalities (972 KB) Eduardo Gutiérrez and Enrique Moral-Benito

    In order to curb the advance of COVID-19, Royal Decree-Law 10/2020 of 29 March 2020
    stipulated the temporary shutdown of all activities considered non-essential between
    30 March and 9 April 2020. This paper uses municipal-level information to quantify the
    short-term effects of this measure both on employment and on containing the pandemic.
    Specifically, we analyse the relationship between the share of firms forced to shut down in
    each municipality and changes in Social Security registrations along with new COVID-19
    cases in April. The results suggest that those municipalities most affected by the nonessential
    activity shutdown endured higher reductions in employment but, at the same
    time, they also witnessed a lower propagation of the pandemic during April. Finally,
    other characteristics such as ageing, colder temperatures, higher population density and
    proximity to the provincial capital are found to be associated with a higher incidence of
    COVID-19 at the municipality level.

  • 20/08/2020
    2021. Supranational debt and financing needs in the European Union (815 KB) Mar Delgado-Téllez, Iván Kataryniuk, Fernando López-Vicente and Javier J. Pérez

    The COVID-19 pandemic has substantially affected the financial trajectory of governments,
    which have seen their financing needs increase significantly. Against this background,
    the European Union has launched a series of programmes to smooth this financing in the
    short term, through the activation of credit lines to cover direct or indirect health expenses
    and temporary unemployment scheme-related expenditure. Further, it has approved a
    recovery fund (dubbed Next Generation EU), which will transfer resources from the European
    budget to the Member States for investments that enhance competitiveness and social and
    environmental sustainability. In this connection, this paper firstly estimates the increase in
    financing needs at the European level. Secondly, it sets out the supranational measures
    adopted to address the consequences of the pandemic, to be financed with debt issued
    by the European Commission, on behalf of the Member States. Finally, it characterises
    the starting point of this situation, i.e. it provides the main figures on euro-denominated
    supranational debt currently in circulation and reviews the arguments in favour of the
    importance of increasing this type of debt and pan-European safe assets.

  • 31/07/2020
    2020. Spanish non-financial corporations’ liquidity needs and solvency after the COVID-19 shock (652 KB) Roberto Blanco, Sergio Mayordomo, Álvaro Menéndez and Maristela Mulino

    The COVID-19 pandemic is exerting an unprecedented adverse impact on economic activity
    and, in particular, on firms’ income. In some cases this means firms’ income is insufficient
    to meet payments to which they have committed. This article presents the results of an
    exercise simulating Spanish non-financial corporations’ liquidity needs for the four quarters
    of this year. The needs derive both from the possible shortfalls caused by developments in
    operating activity, and from investments in fixed assets and debt repayments. According to
    the results, these liquidity needs, between April and December, might exceed €230 billion.
    It is estimated that, through the public guarantee programmes for lending to firms, almost
    three-quarters of this shortfall might be covered. To finance the remainder, companies
    could use their liquidity buffers and/or resort to new debt without public guarantee. In this
    respect, it should be borne in mind that, in recent months, firms with better access to
    credit have managed to raise a high volume of funds without resorting to public guarantees.
    Further, despite the unprecedented fall in business turnover, it is estimated that a significant
    percentage of companies (more than 40%) would be able to withstand this situation without
    undergoing a deterioration in their financial position. However, at the remaining companies,
    the fall-off in activity would have led to significant increases in their level of financial
    vulnerability, more sharply within the SME segment and especially among the firms in the
    sectors most affected by the pandemic, such as tourism and leisure, motor vehicles, and
    transport and storage.

  • 10/08/2020
    2019. Fiscal policy measures in response to the health crisis in the main euro area economies, the United States and the United Kingdom (1.008 KB) Lucía Cuadro-Sáez, Fernando S. López-Vicente, Susana Párraga Rodríguez and Francesca Viani

    The epidemiological crisis caused by the COVID-19 pandemic has prompted an
    unprecedented shock. The containment measures adopted by the authorities have
    involved the temporary shutdown of many productive activities and the general confinement
    of the population. These events motivated the implementation of extraordinary fiscal
    policy measures aimed at strengthening the health system and alleviating the adverse
    effects of the pandemic on the economy, and supporting economic activity in the
    subsequent recovery phase. This paper provides a descriptive and comparative analysis
    of the measures adopted in some of the main advanced Western economies (Germany,
    France, Italy, Spain, the United Kingdom and the United States). The objective is to have a
    structured view of the similarities and differences in national responses to the health crisis
    in the area of fiscal policy. To this end, the authors describe the budgetary and “extrabudgetary” (without an immediate direct budgetary cost, such as public guarantees) measures adopted according to their objective and functionality (health spending, support for firms’ liquidity and solvency, employment protection and support for households), their instrumentation and, to a lesser extent, their size. The analysis shows the presence of high cross-country heterogeneity in terms of the amount of the support packages, although not so much in the types of measures adopted. From the analysis, two messages should be highlighted. First, regarding budgetary measures, the countries’ greater commitment to subsidies and direct transfers to firms and households stands out, compared to other more indirect income support alternatives. Second, in relation to extra-budgetary measures, the main novelty of this crisis compared to previous ones is the prominence given to public guarantee programmes for the provision of liquidity to companies. These are generally implemented through public development banks, compared to other support mechanisms managed, for example, by central banks in collaboration with National Treasuries. Finally, during the recovery phase, public support is focusing on sustaining households’ income and firms’ liquidity – extending, in some cases, the temporary measures previously adopted – while stabilising the economy, supporting the solvency of strategic sectors and encouraging business investment.

  • 17/07/2020
    2018. Inflation expectations in euro area Phillips curves (449 KB) Luis J. Álvarez and Mónica Correa-López

    We analyze the information content of alternative inflation expectations measures,
    including those from consumers, firms, experts and financial markets, in the context of
    open economy Phillips curves. We adopt a thick modeling approach with rolling regressions
    and we assess the results of an out-of sample conditional forecasting exercise by means
    of meta regressions. The information content varies substantially across inflation expectations
    measures. In particular, we find that those from consumers and firms are better at predicting
    inflation if compared to those from experts and, especially, those from financial markets.

  • 16/07/2020
    2017. The child penalty in Spain (856 KB) Alicia de Quinto, Laura Hospido and Carlos Sanz

    The role of parenthood in the gender pay gap has been extensively discussed in the
    literature. Using data from social security records, we adopt the methods used for other
    countries to evaluate the existence of a child penalty in Spain, looking at disparities for
    women and men across different labor outcomes following the birth of the first child. Our
    findings suggest that, the year after the first child is born, mothers’ annual earnings drop
    by 11 percent while men’s remain unaffected. The gender gap is even larger ten years after
    the birth. Our estimate of the long-run child penalty in earnings equals 28 percent, similar
    in magnitude to that found for Sweden and Denmark, and smaller than in the UK, the US,
    Germany, and Austria. In addition, we identify channels that may drive this phenomenon,
    including reductions in working days and shifts to part-time or fixed-term contracts. Finally,
    we encounter heterogeneous responses in earnings and labor market participation by
    educational level: college-educated women react to motherhood more on the intensive
    margin (working part-time), while non-college-educated women are relatively more likely to
    do so in the extensive margin (working fewer days).

  • 04/06/2020
    2016. Exchange rate pass-through in the euro area and EU countries (3 MB) Eva Ortega and Chiara Osbat

    Aggregate exchange rate pass-through (ERPT) to import and consumer prices in the EU is
    currently lower than it was in the 1990s and is non-linear. Low estimated aggregate ERPT to
    consumer prices does not at all mean that exchange rate movements do not have an impact
    on inflation, as aggregate rules of thumb mask substantial heterogeneities across countries,
    industries and time periods owing to structural, cyclical and policy factors. Looking also at
    new micro evidence, four key structural characteristics explain ERPT across industries or
    sectors: (i) import content of consumption, (ii) share of imports invoiced in own currency
    or in a third dominant currency, (iii) integration of a country and its trading partners in global
    value chains, and (iv) market power. In the existing literature there is also a robust evidence
    across models showing that each shock which causes the exchange rate to move has a
    different price response, meaning that the combination of shocks that lies behind the cycle
    at any point in time has an impact on ERPT.
    Finally, monetary policy itself affects ERPT. Credible and aggressive monetary policy reduces
    the observed ex post ERPT, as agents expect monetary policy to counteract deviations of
    inflation from target, including those relating to exchange rate fluctuations. Moreover, under
    the effective lower bound, credible non-standard monetary policy actions result in greater
    ERPT to consumer prices. This paper recommends moving away from rule-of-thumb
    estimates and instead using structural models with sufficient feedback loops, taking into
    account the role of expectations and monetary policy reactions, to assess the impact of
    exchange rate changes when forecasting inflation.

  • 03/06/2020
    2015. Las estrategias de internacionalización de las empresas chinas (1 MB) Miguel Otero Iglesias and Elena Vidal Muñoz

    The aim of this paper is to analyze the variety of internationalization strategies used by
    Chinese firms since the onset of its process of economic liberalization until now, in a
    context in which China is adjusting its growth model to a new equilibrium. It is evident that
    the relationship between China and the rest of the world could be changing. On the one
    hand, the country seems to be restructuring its export profile towards a more sophisticated
    one, directed to innovation, and less dependent on external input. On the other hand,
    the important and growing exit of the Chinese multinationals is due to the will of the Chinese
    government to invest in those sectors in which this country is at a competitive disadvantage
    (raw materials, consumer goods, technology). Both strategies seek to meet a domestic
    development objective.

  • 26/05/2020
    2014. Thoughts on the design of a European Recovery Fund (477 KB) Óscar Arce, Iván Kataryniuk, Paloma Marín and Javier J. Pérez

    The European Union (EU) requires swift, lasting and sufficient action to combat the health and economic crisis triggered by COVID-19. The ECB and EU Council’s responses have been effective in mitigating the short-term impact of the crisis and reducing the risks of it becoming protracted by enabling the Member States (MSs) to mobilise a significant volume of funds. Nevertheless, the scale of the crisis has underlined the absence of key shared economic policy instruments.
    This article analyses the conditions required for an effective European response to the crisis and its possible consequences in the future. First, the article outlines the basic features which should underpin a recovery strategy based on providing a joint response to common structural challenges (the fight against climate change, digitalisation, higher investment in public health and disease prevention, and a restructuring of broad areas of the productive system) with fresh funds and a renewed reform drive.
    Second, a design proposal for a “Recovery Fund” is set out. Funds will be mobilised with the twofold objective of maintaining suitable financing conditions for MSs’ sovereign debt (which requires giving the Fund the capacity to purchase government debt securities for an extended period of time) and boosting the financing of specific structural projects aligned with the strategic needs of the EU as a whole. This instrument must be efficient (governed by the principle of a suitable and proportionate use of public funds), show solidarity (by making its funds particularly available to those who most need them), be balanced (by eliminating permanent transfer risks resulting from the opportunistic behaviour of Member States) and have conditions attached to ensure that the funds are used to advance the objectives of the recovery strategy. Insofar as its creation is tied to a medium and long-term European strategy, the Fund’s effectiveness should be geared to covering a very extensive time frame, potentially laying the foundations for a permanent structure. And it should be backed by the EU budget, duly strengthened by additional funds from the MSs and receipts from the future introduction of new EU-wide taxes.

  • 22/05/2020
    2013. The housing market in Spain: 2014-2019 (1 MB) Directorate General Economics, Statistics and Research

    This paper describes the main features of the Spanish housing market during the latest
    expansionary period (2014-2019), and discusses two aspects relating to its recent situation.
    First, it analyses the evidence of households’ possible housing affordability difficulties. It
    finds that these difficulties have been exacerbated in recent years, especially for specific
    groups such as the young and low-income households, and particularly in certain zones,
    such as the major metropolitan areas. Next, it reviews the ensuing consequences from
    the standpoint of economic efficiency and of social challenges, analysing potential public
    measures that might be considered to alleviate these difficulties. Finally, it assesses the
    potential systemic risks associated with the residential real estate market, concluding that
    these were, at end-2019, more limited than those prevalent in the run-up to the financial
    crisis that broke in 2008.

  • 21/05/2020
    2012. Fiscal expenditure spillovers in the euro area: An empirical and model-based assessment (2 MB) Mario Alloza, Marien Ferdinandusse, Pascal Jacquinot and Katja Schmidt

    The paper describes the main transmission channels of the spillovers of national fiscal
    policies to other countries within the euro area and investigates their magnitude using
    different models. In the context of Economic and Monetary Union (EMU), fiscal spillovers
    are relevant for the accurate assessment of the cyclical outlook in euro area countries, as
    well as in the debates on a coordinated change in the euro area fiscal stance and on a euro
    area fiscal capacity. The paper focuses on spillovers from expenditure-based expansions by
    presenting two complementary exercises. The first is an empirical investigation of spillovers
    based on a new, long quarterly dataset for the largest euro area countries and on new
    estimates based on annual data for a panel of 11 euro area countries. The second uses a
    multi-country general equilibrium model with a rich fiscal specification and the capacity to
    analyse trade spillovers. Fiscal spillovers are found to be heterogeneous but generally
    positive among euro area countries. The reaction of interest rates to fiscal expansions is an
    important determinant of the magnitude of spillovers.

  • 06/05/2020
    2011. The Spanish economy in 2019 (947 KB) Directorate General Economics, Statistics and Research

    The Spanish economy prolonged its expansionary phase in 2019. However, its growth rate
    moderated, owing to the loss of momentum of domestic demand, which countered the larger
    contribution of the external sector. The deceleration of domestic demand reflected flatter
    private consumption and investment, while the external demand contribution was the result
    of an easing in imports and some acceleration in exports. In line with these developments,
    employment creation grew at a slower pace. In any event, the Spanish economy showed
    greater resilience to the deterioration of the external context than the euro area, and hence
    retained its positive growth differential. Inflationary pressures remained contained despite
    the increase in unit labour costs. Against this background, the Spanish economy moved
    in early 2020 on a progressively decelerating path towards its potential growth rate. This
    outlook has been completely changed by the global health crisis caused by COVID-19. It
    has affected with virulence a large number of countries, including Spain, and is severely
    disrupting economic activity. The duration and intensity of the crisis is currently shrouded
    in great uncertainty.

  • 11/05/2020
    2010. El sistema de tasación hipotecaria en España. Una comparación internacional (554 KB) Miguel Ángel López y M.ª de los Llanos Matea

    The 2008 crisis evidenced that real-estate appraisal for mortgage lending is key to financial
    stability. This paper focuses on describing the Spanish mortgage-lending appraisal system and comparing it with those used in other advanced economies. A wide range of appraisal models is used. The model used depends, inter alia, on the relative importance of the real-estate sector in each country. For instance, there are countries in which the appraisal profession is unregulated and there are no rules on the use of a specific methodology, the model reports are not standardised, the appraisers are not certified and the sector is self-regulated. Others, by contrast, Spain included, have drawn up standards establishing the valuation methodology, the model appraisal report, and the requirements for incorporation and certification of appraisal companies. These countries also have a national supervisory authority.

  • 30/04/2020
    2009. A fiscal capacity for the euro area: lessons from existing fiscal-federal systems (2 MB) Pablo Burriel, Panagiotis Chronis, Maximilian Freier, Sebastian Hauptmeier, Lukas Reiss, Dan Stegarescu and Stefan Van Parys

    After the financial and economic crisis in Europe, a broad consensus has emerged that
    a stronger fiscal dimension may be needed to complete the architecture of Economic
    and Monetary Union (EMU). This paper analyses the performance of interregional transfers
    in existing fiscal-federal systems, notably in Austria, Belgium, Germany, Spain and the
    United States, and aims to draw lessons for the design of a euro area fiscal instrument.
    The empirical risk-sharing analysis in this paper suggests that effective cross-regional
    stabilisation of asymmetric shocks tends to work via direct cash transfers to households,
    such as unemployment benefits, which are financed out of cyclical central government
    taxes and social security contributions. This would suggest that a euro area budgetary
    instrument for stabilisation should be designed as a tool that enhances the automatic
    stabilisation capacity in the single currency area. At the same time, it seems important that
    a prospective central stabilisation instrument for the euro area would be integrated in an
    overall fiscal policy framework that ensures proper incentives for national policymakers.

  • 24/04/2020
    2008. Neurometrics applied to banknote and security features design (12 MB) Rubén Ortuño, José M. Sánchez, Diego Álvarez, Miguel López and Fernando León

    The aim of this paper is to present a methodology on the application of neuroanalysis
    to the design of banknotes and security features. Traditionally, evaluation of the perception
    of banknotes is based on explicit personal responses obtained through questionnaires
    and interviews. The implicit measures refer to methods and techniques capable
    of capturing people’s implicit mental processes. Neuroscience has shown that, in most
    brain processes regulating emotions, attitudes, behaviours and decisions, human
    consciousness does not intervene. That is to say, these implicit processes are brain
    functions that occur automatically and without conscious control.
    The methodology on neuroanalysis can be applied to the design of banknotes and security
    features, and used as an effective analysis tool to assess people’s cognitive processes,
    namely: visual interest, attention to certain areas of the banknote, emotions, motivation
    and the mental load to understand the design and level of stimulation. The proposed
    neuroanalysis methodology offers a criterion for making decisions about which banknote
    designs and security features have a more suitable configuration for the public. It is
    based on the monitoring of conscious processes, using traditional explicit measures, and
    unconscious processes, using neurometric techniques.
    The neuroanalysis methodology processes quantifiable neurometric variables obtained
    from the public when processing events, such as eye movement, sight fixation, facial
    expression, heart rate variation, skin conductance, etc. A neuroanalysis study is performed
    with a selected group of people representative of the population for which the design of a
    banknote or security features is made. In the neurometric study, suitably prepared physical
    samples are shown to the participants to collect their different neurometric responses,
    which are then processed to draw conclusions.

  • 01/04/2020
    2007. La efectividad de los programas del FMI en la última década (423 KB)

    In IMF lending to countries in balance of payments difficulties, access to Fund resources
    is conditional to complying with series of measures and reforms contained in an
    economic program. The IMF periodically revises the design and conditionality of economic
    programs. One of the key findings of the latest Review of Conditionality concluded
    in 2019, comprising programs between 2011 and 2017, is a proposal to measure
    the effectiveness of IMF programs in terms of their objective of correcting borrowing
    countries imbalances. This exercise shows modest results. In addition, the review has
    revealed the excessive optimism of macroeconomic projections used in programs,
    together with an overestimation of the positive effects of structural reforms. These
    factors may jeopardize the effectiveness of economic programs. There remain open
    questions when revising the design and conditionality of IMF programs. Among them, the
    links between conditionality and stigma, the social impact and communication strategy
    of adjustment policies so that they can be more socially acceptable, the duration of IMF
    programs, the role of debt restructurings, and the adequacy of policy recommendations,
    beyond the strict compliance with conditionality procedures.

  • 30/03/2020
    2006. A sectoral anatomy of the Spanish productivity puzzle (2 MB) Pilar Cuadrado, Enrique Moral-Benito and Irune Solera

    Income per capita in Spain relative to that of other advanced EU countries held stable at
    around 90% from 2000 to 2016. Stagnant labour productivity is at the root of this lack
    of convergence. This paper examines these developments from a sectoral perspective
    based on recently released EU KLEMS data. Our main findings are as follows: i) Spain
    has lower productivity levels vis-à-vis other EU countries in most sectors, with only
    4 out of 23 sectors exhibiting higher productivity in Spain: accommodation and food
    services, agriculture, electricity and gas supply, and information and communication services;
    moreover, the allocation of employment towards low-productivity sectors accounts for
    half of the aggregate Spain-EU productivity gap in levels; ii) turning to the changes in the
    2000-2016 period, the overall lack of convergence is driven by a divergence in productivity
    relative to EU countries, especially within services sectors; iii) while both ICT (Information
    and Communication Technology) and non-ICT capital in Spain converged towards
    European levels, Total Factor Productivity (TFP) divergence in most sectors explains the
    lack of convergence in labour productivity. Finally, we explore one potential explanation for
    this pattern: the TFP divergence and ICT capital convergence can be rationalised in the
    presence of complementarities between ICT-capital and labour force skills. Indeed, our
    industry-country regression analysis suggests that the dismal performance of Spanish
    TFP might be related to the significant deficit in the population’s skills as proxied by
    PIAAC-OECD scores.

  • 10/03/2020
    2005. An introduction to the current debate on central bank digital currency (CBDC) (530 KB) Juan Ayuso and Carlos Conesa

    This paper provides an overview of the concept of central bank digital currency (CBDC) that
    may serve as a basis for an ordered discussion and an in-depth analysis of the different
    relevant aspects in the ongoing debate about this digital financial asset. The primary
    objective is to review the grounds that could warrant issuing CBDC and undertake a
    preliminary analysis of its main implications, especially those linked to the CBDC models
    that seem most likely to be adopted, judging by the motivations of the central banks whose
    issuance plans are currently most advanced.

  • 05/02/2020
    2004. Determinants of investment in tangible and intangible fixed assets (410 KB) Miguel García-Posada, Álvaro Menéndez and Maristela Mulino

    We investigate which firm characteristics are associated with investment in tangible and intangible fixed assets, paying special attention to the case of R&D, and which funding sources are used for each type of investment. Regarding firm characteristics, we find that younger and more profitable firms tend to invest more in all asset types. In the case of size, larger firms invest more in R&D and intangibles but less in tangible fixed assets. In addition, there is a concave relationship between leverage and investment. Regarding funding sources, we find that cash flow is the most important source of funding for intangibles and R&D, whereas financial debt is the most important funding source for tangible fixed assets. Stock issues are used to fund R&D and, especially, tangible fixed assets. Firms use cash holdings to smooth investment in R&D.

  • 29/01/2020
    2003. Structural transformation in the Spanish economy (1 MB) Omar Rachedi

    This paper studies how the variation in sectoral productivities shapes the sectoral
    composition of the Spanish economy from 1980 to 2015. I first document an asymmetric
    behavior of sectoral productivities: the productivity of services declines over time, whereas
    the productivity of manufacturing increases until the 1990s, before slowing down. I feed the
    path of sectoral productivities observed in the data into a model of structural transformation
    with two sectors (services and manufacturing) which are connected by an Input-Output
    matrix. The model reproduces the variation of the gross output services share of the
    Spanish economy between 1980 and 2015. The model implies that – even absent changes
    in the trends of sectoral productivities – the annual growth rate of GDP between 2015 and
    2050 shrinks by 0.6 percentage points with respect to the average growth rate between
    1980 and 2015. Hence, annual GDP growth would decline from 2.3% to 1.7%. If sectoral
    productivities were to equal the levels observed in the Euro Area between 1980 and 2015,
    the average growth rate of Spanish GDP between 2015 and 2050 would be 2.1%.

  • 23/01/2020
    2002. Public intervention in the rental housing market: a review of international experience (543 KB) David López-Rodríguez and M.ª de los Llanos Matea

    In recent years, residential rental prices have experienced remarkable growth in many
    of the major metropolitan areas of advanced economies. On occasions, these increases
    in rental prices have caused a significant increase in the cost of rental housing in the
    household consumption basket and difficulties in access to housing for certain groups. In
    this context, there has been a resurgence of the debate about the role of public policies
    in the rental housing market, designed to mitigate both the problems of access to housing
    and the potential negative effects of the growth of rental prices on workers’ mobility or on
    the macro-financial stability of the economy. In this paper we review the main instruments
    of public intervention in the residential rental market, in the light of international experience
    among the main advanced economies. Broadly speaking, the different policies can be
    classified into three main groups: rent controls; public provision of rental housing; and a
    wide range of heterogeneous measures aimed at both incentivising the supply of private
    rental housing and containing the increase in household spending caused by rising rents.
    The experience accumulated over decades in the development of these policies and the
    increasing availability of quantitative evaluations of their impact illustrate some of
    the implementation challenges presented by support policies for residential rentals, as
    well as the wanted and unwanted consequences associated with this type of intervention.

  • 15/01/2020
    2001. The use of BVARs in the analysis of emerging economies (347 KB) Ángel Estrada, Luis Guirola, Iván Kataryniuk and Jaime Martínez-Martín

    The process of internationalisation that many Spanish banks have embarked upon in recent years has resulted in the need for much closer monitoring of the economies in which they are present, especially by a supervisory body such as the Banco de España. In this paper, we present a comprehensive theoretical and empirical modelling approach, developing a set of five country-specific structural BVARs for Brazil, Mexico, Turkey, Chile and Peru, the economies representing the largest exposures of Spanish banks to the emerging markets. The results obtained show that our modelling strategy provides useful tools to: (i) analyse the structural shocks that underlie their recent macroeconomic behaviour; (ii) study the impact of certain decisions of policymakers on GDP, inflation and other variables; and (iii) carry out accurate conditional and unconditional projections two years ahead of the most policy-relevant variables. These projections, together with the “analyst’s judgement”, constitute the bulk of our assessment of the future behaviour of these economies.

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