Using a sectoral bailout to make wide reforms

Royo, Sebastián; Steinberg, Federico

doi:10.4324/9780429426940-7

Cited by 13 publications

(5 citation statements)

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“…The Spanish government's immediate reaction to the unfolding crisis was similar to that of most other industrialized economies, addressing the bursting of the bubble through fiscal expansion in an effort to restore market confidence (Hardiman and Dellepiane 2012;Royo and Steinberg 2019). Only in spring 2010, as the balance sheets of semi-public Spanish banks started deteriorating rapidly, did internal adjustment by means of austerity and structural reform become part of the Spanish crisis-resolution agenda (Royo 2013).…”

Section: Spain In Crisismentioning

confidence: 99%

“…Both took action against unpopular spending cuts, tax increases, and structural reform (Anduiza et al 2014;del Rio Loira and Fenger 2019). During the tenure of the PP, Spain embarked upon significant fiscal consolidation based on cuts in public wages and regional state budgets, as well as hikes to VAT rates, significant regulation of labor markets and targeted privatization efforts (MacInnes and Pinedo 2011; Royo and Steinberg 2019). Yet, in the end, austerity and structural reform alone could not address the Spanish crisis.…”

Section: Spain In Crisismentioning

confidence: 99%

“…Yet, in the end, austerity and structural reform alone could not address the Spanish crisis. In May 2012, after prolonged efforts from both PSOE and PP cabinets to avoid a sovereign bailout, the Spanish government accepted a partial banking bailout from the Eurozone Troika designed specifically to restore the solvency of its fledgling financial sector (Royo and Steinberg 2019). By August of the same year, the ECB announced a comprehensive scheme to purchase government bonds in secondary markets, in order to further aid the Spanish government in the issuance of new debt: Outright Monetary Transactions, more commonly referred to as OMT (ECB 2012).…”

Section: Spain In Crisismentioning

confidence: 99%

“…Internal adjustment did not, however, end with the demise of the PSOE government, but was rather accelerated upon the arrival of the liberal-conservative PP government that superseded it. While both governments made clear that fiscal consolidation efforts and structural reforms      129 were informally imposed by Eurozone Troika institutions, some argue that the crisis rather generated a window of opportunity for particularly PP to introduce neoliberal reforms that had been on their economic policy agenda for a long time (Cioffi and Dubin 2016;Royo and Steinberg 2019).…”

Section: Policies and Conflict Lines Surrounding Internal Adjustment ...mentioning

confidence: 99%

“…It is clear now that successive Spanish government cabinets-led by both PSOE and PP-explicitly wanted to avoid a scenario where the Spanish state would have to appeal to the Eurozone Troika for a sovereign bailout such as those requested by Greece, Portugal, and Ireland (Royo and Steinberg 2019;Zapatero 2013). Prime Minister Rajoy insisted until the very last minute that Spain would not require any financing in the form of a sovereign bailout, rather emphasizing the importance of alternative financing measures aimed at breaking risk exposures between Eurozone banks and sovereigns-policies such as generating a Eurozone-level deposit guarantee scheme and introducing mutual debt in the form of Eurobonds (Dowsett and Stonestreet 2012).…”

Section: Policies and Conflict Lines Surrounding Financing In Spainmentioning

confidence: 99%

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The Politics of Bad Options

Walter

Ray

Redeker

2020

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Why did the Eurozone crisis prove to be so difficult to resolve? Why was it resolved in a manner in which some countries bore a much larger share of the pain than other countries? Why did no country leave the Eurozone rather than implement unprecedented austerity? Who supported and who opposed the different policy options in the crisis domestically, and how did the distributive struggles among these groups shape crisis politics? Building on macro-level statistical data, original survey data from interest groups, and qualitative comparative case studies, this book argues and shows that the answers to these questions revolve around distributive struggles about how the costs of the Eurozone crisis should be divided among countries, and among different socioeconomic groups within countries. Together with divergent but strongly held ideas about the “right way” to conduct economic policy and asymmetries in the distribution of power among actors, severe distributive concerns of important actors lie at the root of the difficulties of resolving the Eurozone crisis as well as the difficulties to substantially reform European Monetary Union (EMU). The book provides new insights into the politics of the Eurozone crisis by emphasizing three perspectives that have received scant attention in existing research: A comparative perspective on the Eurozone crisis by systematically comparing it to previous financial crises, an analysis of the whole range of policy options, including the ones not chosen, and a unified framework that examines crisis politics not just in deficit-debtor, but also in surplus-creditor countries.

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Section: Spain In Crisismentioning

confidence: 99%