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Spain economy: An empirical analysis

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Farmhand
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  1. Introduction
  2. About Spain
  3. The Euro currency
  4. Risk aversion
  5. The recession
  6. The housing crisis
  7. Unemployment in Spain
  8. Conclusion

Spain is one of the largest economies in Europe with a GDP over 1.3 trillion USD. They experienced an economic boom in the early 2000's as most industrialized nations did. However, with an increasing trade deficit, looming of the housing bubble about to burst and the worldwide financial crisis in 2008, Spain has seen catastrophic events take place and civil unrest that will require years to pull themselves out of and an increasing need for imminent change in the political system. Riots and protests span across Spain especially in the major cities such as Barcelona and Madrid. Violence often occurs at these events with items either being burned or fights breaking out. Flags of the Spanish Worker's Union, along with a different national flag (one that is purple, yellow, & red) to symbolize Spain without a king, can be seen throughout the squares where these events take place. Thousands of individuals come to protest the decisions made by Spanish government and many often see corruption as the root of the problem. In addition there are daily protests every day at noon where throughout the whole city, groups of individuals will walk onto a main street and block it for ½ hour to show their disgust with their government. These protests are legal and police often help to facilitate these.

Spain is one of many members of European Union, the Eurozone & the Schengen zone. With legendary football clubs such as FC Barcelona & Real Madrid & with Spain winning the World Cup and Euro Championship, football is the biggest sport in Spain. To fully understand a country's behavior is to fully understand their culture as well. With having siestas during the day it can be questioned how efficient their system is and how productive they are as compared with other nations. In addition, if watching a football match is more important than doing one's work, or productivity is slowed from individuals glued to the TV, these cultural differences can help when analyzing the root of issues and may give us insight to reasons why countries such as Spain, Italy and Greece have had huge economic downturns and why Germany is one of the most successful Euro zone nations. Spain is currently a member of the Euro Currency Union along with Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, The Netherlands, Portugal, Slovakia, & Slovenia.

[...] Spain is currently part of a currency union known as the Euro and has given up monetary autonomy to the European Central Bank. The main goal of the ECB's monetary policy is to maintain price stability and have an inflation rate of about 2%. During the 2008 global crisis they expanded the money supply and reduced interest rates to near zero levels. The ECB also gave enhanced credit support to the banking system in Europe. The first measure was unlimited liquidity provision to all Euro area banks at a fixed rate. [...]


[...] However, continued financial crises in Spain & Greece may lead to depreciation of the Euro. Similarly if Spain or Greece decide to leave the Euro zone and abandon the Euro currency that will likely have a significant effect on the exchange rate. Spain's current trade balance is - 36.2 billion USD. In addition, their current account balance is also negative at - 6.3 billion USD. This means that Spain has more exports than imports and that they are net debtor. [...]


[...] Spain economy: An empirical analysis Spain is one of the largest economies in Europe with a GDP over 1.3 trillion USD. They experienced an economic boom in the early 2000's as most industrialized nations did. However, with an increasing trade deficit, looming of the housing bubble about to burst and the worldwide financial crisis in 2008, Spain has seen catastrophic events take place and civil unrest that will require years to pull themselves out of and an increasing need for imminent change in the political system. [...]


[...] The number of people applying for jobless benefits fell by a rare piece of good news for the crisis-hit euro zone that some people look as a step forward. Yet, when these numbers are seasonally adjusted, we see no actual change. This lack of employment opportunities in Spain has led to Germany having a record high immigration rate of consisting of many workers from Spain as well as Eastern European countries. Although Spain has been suffering their relatively high interests on their bonds has attracted many investors. [...]


[...] In conclusion the country of Spain is in a deep economic recession. With such an incredibly high level of unemployment at 26% and corruption in the political system many natives have voiced their opinion in protests and try to make an impact. This so far has not shown much as Spain is still in a deep economic recession. With giving up all control over their monetary policy Spain has had to rely on the ECB, however with the ECB serving all Eurozone countries they cannot create a policy that will only benefit/support one country. [...]

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