Mauricio Drelichman, Jordi Vidal-Robert, Hans-Joachim Voth, 16 August 2021

Throughout history, religion has influenced growth and per capita output, and its effects are felt even in modern times. This column investigates the effect of one of history’s longest-running and most intrusive forms of religious persecution – the Spanish Inquisition. In areas without measured persecution, annual GDP per capita is significantly higher than in areas where the Inquisition was most active. Local levels of persecution continue to influence economic activity and basic attitudes some 200 years after the abolition of the Inquisition, undermining trust, reducing investments in human capital, and impoverishing hardest-hit areas.

Margherita Russo, Claudia Cardinale Ciccotti, Fabrizio De Alexandris, Antonela Gjinaj, Giovanni Romaniello, Antonio Scatorchia, Giorgio Terranova, 02 August 2021

Many countries turned to use contact-tracing apps to help control the spread of COVID-19. Despite public policy efforts, however, tracking apps have not been a success because of public concerns over data privacy. This column compares nine countries to explore the conditions behind the successful use of digital technologies and AI for public purposes. Individuals give over personal data to internet companies but are wary of sharing their data for the public interest. Citizen trust in public interventions and commitment to social goals need to be nurtured in normal times to be effective in emergencies.

Joan Costa-Font, 29 June 2021

Covid-19 vaccines exert large positive spillover effects beyond their protective effects for individuals, and thus their value far exceeds their costs. But these benefits are only realised if enough people receive both doses, so policymakers need to ensure appropriate incentives are in place to mitigate vaccine hesitancy. This column explores the potential of different incentives, arguing that creating a narrative of social esteem around being vaccinated may be the most effective way to ensure widespread uptake.

Joan Costa-Font, Sergi Jiménez-Martín, Analía Viola, 11 April 2021

The COVID-19 pandemic has had a disproportionate impact on older Europeans living in nursing homes. This column finds evidence consistent with a 'fatal underfunding hypothesis', suggesting that the regional variation in nursing home fatalities during the first wave of the pandemic in Spain is associated with indicators of underfunding such as understaffing, larger nursing homes, and occupancy rates. Coordination failures both between healthcare and long-term care and between central and regional governments also contributed.

Katherine Stapleton, Michael Webb, 12 December 2020

There has been much speculation that automation in high-income countries will lead to reshoring of production from lower-income countries or further reduce offshoring. Using rich data on Spanish manufacturing firms between 1990 and 2016, this column studies how automation in Spanish firms affected imports and multinational activity involving lower-income countries. It shows that, contrary to the typical assumption, the deployment of robots in Spanish manufacturing firms actually caused them to increase offshoring to lower-income countries. This effect was mainly caused by firms starting to newly offshore as a consequence of automation.

Leandro de la Escosura, Joan R. Rosés, 21 November 2020

The current productivity slowdown in advanced economies has triggered a lively debate about its causes and remedies. This column takes a long-run perspective to study drivers of productivity expansion and stagnation in Spain during the last 170 years. It finds that the productivity slowdown coincided with resource reallocation towards sectors attracting less innovation, with low investment in intangibles and low investment-specific technical change. Obstacles to competition in product and factor markets, subsidies, and cronyism further contributed to capital misallocation, negatively affecting productivity growth.

Brian Nolan, Juan C. Palomino, Philippe Van Kerm, Salvatore Morelli, 19 September 2020

Whether and how much intergenerational transfers contribute to wealth inequality is still subject to debate. This column analyses household survey data on inheritance and gifts inter vivos in France, Germany, Great Britain, Ireland, Italy, Spain, and the US to relate current household wealth levels and inequality to the receipt of intergenerational wealth transfers. In these countries, large transfers increase overall wealth inequality. Strengthening taxation capacity and instating lifetime capital acquisitions tax for gifts and inheritances may help counter the dis-equalising effect of intergenerational transfers.

Pilar Nogues-Marco, Alfonso Herranz-Loncán, Nektarios Aslanidis, 13 August 2020

The adoption of the euro, for all its flaws, constituted a giant step in the process of full integration between the European economies. It also reproduced at a larger scale the dynamics of monetary unification that took place during the 19thcentury. This column presents a historical study of Spain, evaluating the changes in the internal money market. The analysis suggests that transaction costs undertook a sustained decline over the 19th century. By contrast, the efficiency of the market did not improve before the 1880s, perhaps due to a shift in monetary leadership changes in national economic geography.

Giancarlo Corsetti, Joao B. Duarte, Samuel Mann, 07 August 2020

A persistent challenge for the ECB has been meeting the various needs and demands of euro area member states. This column provides empirical and quantitative evidence suggesting that the transmission of the ECB’s monetary policy varies significantly across member states. For variables such as those related to housing and labour markets, the dispersion of responses to a monetary shock is twice as large as the average response. The results also suggest that the disruption to market integration brought about by the COVID-19 crisis may create further challenges to conducting monetary policy in the euro area.

Olivier Marie, Judit Vall Castello, 28 July 2020

Many governments increased temporary sick-leave benefits in the wake of COVID-19, but the benefits are due to expire after a certain time. This column looks back at a 2012 policy change in Spain which radically altered the generosity of paid sick leave available to public-sector employees. Following the change, the number of sick leaves taken by public-sector workers dropped 29% but the likelihood of relapses increased, with most of it driven by infectious disease relapses. Policymakers need to manage changes in sick-leave generosity, especially in the face of persistent or recurring infectious diseases such as COVID-19.

Leandro de la Escosura, Carlos Álvarez-Nogal, Carlos Santiago-Caballero, 07 May 2020

It is believed that living standards in world economies stayed roughly constant prior to 1800. This column presents data on Spanish population and economic development from 1277-1850 which challenges this view. Population and economic growth are found to evolve simultaneously, contradicting the Malthusian view. Spain was a frontier economy within Europe that, after a drop in living standards after the Black Death, grew steadily until the 1570s, when its path diverged from the rest of Europe. 

Vasco Carvalho, Juan Ramón García, Stephen Hansen, Alvaro Ortiz, Tomasa Rodrigo, José V. Rodríguez Mora, Pep Ruiz, 27 April 2020

Individual transaction-level data can be used to map the changes in consumer behaviour in response to the COVID-19 lockdown measures. This column exploits data from BBVA to analyse the nature of the impact in Spain. The findings indicate that there has been a large decline in overall expenditure and that anticipatory spending (stockpiling) has taken place, whilst non-essentials have more or less collapsed. The authors find no evidence that differential exposure to the pandemic has affected regional expenditure dynamics, but within cities, areas with more prevalence of the pandemic have suffered a bigger economic collapse overall.

Stephanie Ettmeier, Chi Hyun Kim, Alexander Kriwoluzky, 09 April 2020

The ongoing COVID-19 pandemic in Europe is severe and spreads economic uncertainty. This column explores the evolution of financial market participants’ expectations during the COVID-19 pandemic, estimating yield curves of bonds in France, Germany, Italy, and Spain. The authors carry out an event study to investigate the potential impact of European fiscal and monetary policy measures on these yields. The results suggest that policy measures must be large and coordinated on the European level, and that fiscal and monetary policy must act jointly to fight the pandemic’s negative economic consequences

Aitor Erce, Antonio Garcia Pascual, Toni Roldán Monés, 25 March 2020

The amount of financial resources needed to fight the COVID-19 is so large that most euro area member states will need a backstop from Europe. This column discusses how to use the European Stability Mechanism toolbox to finance the fight, using Spain as an example. It shows that an ESM loan with low margins and a smoothed repayment schedule would stabilise debt stocks and gross financing needs, and that ESM financing could help Spain save around €150 billion in interest payments between 2020 and 2030. A combination of bold ESM and ECB support could reinforce Spain’s debt sustainability after the COVID-19 shock, and could do the same for other member states. 

António Henriques, Nuno Palma, 10 December 2019

The decline of countries such as Castile and Portugal, which first benefited from access to the New World, relative to their followers, especially England and the Netherlands, is often attributed to the quality of the Iberian countries’ institutions at the time Atlantic trade opened. This column questions this narrative by comparing Iberian and English institutional quality over time, considering the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. It finds no evidence that the political institutions of Iberia were worse until at least 1650.

Adam Brzezinski, Yao Chen, Nuno Palma, Felix Ward, 14 November 2019

During the early 16th to 19th centuries, Spain received large amounts of monetary silver from its colonies in America. Vagaries of the sea thus affected Spain’s money supply. This column investigates the effects of money supply shocks on the economy using the case of maritime disasters in the Spanish Empire. It finds that a one-percentage-point reduction in the money growth rate caused a 1.3% drop in real output that persisted for several years. Analysing monetary transmission channels, it shows that price rigidities and credit frictions account for most of this non-neutrality result.

Eric Golson, 11 November 2019

Neutrality has long been viewed as impartiality in war. This column, part of the Vox debate on World War II, asserts that neutral states in the war were realist in approaching their defence to ensure their survival. Neutrals such as Portugal, Spain, Sweden, and Switzerland maintained independence by offering economic concessions to the belligerents to make up for their relative military weakness. Economic concessions took the form of merchandise trade, services, labour, and capital flows. Depending on their position and the changing fortunes of war, neutral countries could also extract concessions from the belligerents, if their situation permitted.

Mitu Gulati, Ugo Panizza, Mark Weidemaier, Grace Willingham, 18 May 2019

One way for a government to reassure investors of its willingness to repay is to give them a priority claim to state assets. It remains to be seen, however, whether such commitments are viewed as credible by market participants. This column investigates how markets responded to two such commitments. A commitment by the government of Spain did not affect yield spreads, while one by the government of Puerto Rico did. This may be because, as a sub sovereign, Puerto Rico faced higher constraints on its ability to renege. 

Cheng Chen, Claudia Steinwender, 30 April 2019

Firms around the world are facing increased import competition, especially from low-wage countries like China, but the effect on the productivity of impacted firms remains unclear. Using data from Spain, this column studies how firms under different types of management respond to an increase in competition, and shows that less-productive firms that are both family owned and managed see the greatest improvement in productivity. Their managers care more about the long-term survival of their firm, prompting additional effort when faced with an increased bankruptcy risk.

Miguel Almunia, Pol Antràs, David Lopez Rodriguez, Eduardo Morales, 04 February 2019

The recommendation that firms reduce unit and labour costs to gain international competitiveness in response to domestic economic crises is based on the assumption that domestic and foreign supply decisions are not linked at the firm level. This column shows that in a monetary union, exports can have a significant impact in mitigating domestic slumps through the ‘venting-out’ mechanism. By reducing their use of flexible inputs relative to fixed, firms can achieve a short-term decrease in marginal costs to gain competitiveness abroad. This explains how an economic crisis and an export boom can take place at the same time.

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