Working Paper: CEPR ID: DP7591
Authors: Leandro Prados de la Escosura
Abstract: Spain's financial position during the late 19th and early 20th century has usually been presented as one of persistent deficit on current account, which resulted from her integration into international commodity and factor markets and this, in turn, slowed down growth. In this essay a preliminary reconstruction of the balance of payments on current account allows us to reject this view. In fact, a net capital inflow made possible to meet the demand for investment boosting economic performance. Current account reversals in a context of macroeconomic domestic imperfections help to explain the economic slowdown at the turn of the century.
Keywords: balance of payments; current account; reversals; growth; investment; saving; Spain; sudden stops
JEL Codes: F21; F32; F43; N13; N73
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| net capital inflows (F21) | domestic investment (E22) |
| net capital inflows (F21) | economic performance (P17) |
| current account reversals (F32) | economic growth (O49) |
| current account reversals (F32) | slowdown in economic growth (F69) |
| decrease in investment (E22) | slowdown in economic growth (F69) |