1 Advances in Political Economy - Department of Political Science

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Sub-central Governments and Debt Crisis

in Spain over the Period 2000–2011

Fernando Toboso

1 Introduction

Since the financial crisis erupted in the fall of 2008, the government borrowing

sector has been in turmoil in almost all western developed countries. The present

chapter focuses on the quantitative evolution of sub-central, as well as central, gov-

ernment borrowing in Spain, a country that is being experiencing serious problems

at this respect. Because an intense process of political and fiscal decentralization

has taken place in Spain since the mid eighties, the chapter examines whether this

drive to decentralization has been paralleled by any fiscally undisciplined behavior

on the part of sub-central governments over the periods 2000–2007 and 2008–2011.

The empirical analysis will be based on the internationally comparable public fi-

nance provided by the OECD, the Eurostat and the Bank of Spain. As regards the

breakdown by governmental subsectors, the National Accounts criteria^1 require the

government sector to be broken down into four sub-sectors: central, state, local and

social security funds. Concerning public debt, central governments usually are by

far the most important debt holders, owing more than half of total debt in most

cases, as we are going to see also in the case of Spain. Of course, Spain enjoys

some singular organizational characteristics regarding intergovernmental relations

(^1) S.N.A. 93 has recently been updated to S.N.A. 2009. These criteria are fully compatible with
those of E.S.A. 95.
A previous version of this chapter was presented at the International Conference on Political
Economy and Institutions held in May 2–4, 2012, Baiona, Spain. I thank participants in the
conference, as well as anonymous referees, for helping me to concentrate on what we all consider
to be the key issues.
F. Toboso (B)
Faculty of Economics, Departamento de Economía Aplicada, University of Valencia,
Av. Tarongers s/n, 46022 Valencia, Spain
e-mail:[email protected]
url:www.uv.es/ftoboso
N. Schofield et al. (eds.),Advances in Political Economy,
DOI10.1007/978-3-642-35239-3_6, © Springer-Verlag Berlin Heidelberg 2013
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