La identidad de los balances sectoriales y la política de austeridad fiscalel caso del desendeudamiento privado en España

Abstract

Sectoral balances analysis is useful for contextualizing the possibilities of macroeconomic policy, as well as facilitating understanding of the dynamics of private sector borrowing. This article shows how austerity policies carried out during the Great Recession of 2008 can lengthen economic stagnation. Understanding this dynamic can avoid falling into this kind of error in the face of the new recession facing the world economy because of the COVID-19 Pandemic. Throughout the article, an analysis of the deleveraging process that characterized the dynamic of the Spanish economy in the period 2008-2016 will be carried out. Understanding the identity of sectoral balances, it would be easy to understand how non-financial private sector of the Spanish economy could not carry out its deleveraging process in an accelerated manner if the public sector did not incur persistent fiscal deficits, since improving the position of the external sector did not compensate for the investment paralysis of the private sector. In this context, public deficit reduction policies could only slow private deleveraging and lengthen the recession.