Building on Easy Money: The Political Economy of Housing Bubbles in Ireland and Spain

Sebastian Dellepiane Avellaneda, Niamh Hardiman, Jon Las Heras

Research output: Working paperDiscussion paper

Abstract

This paper undertakes a structured, focused case-study comparison of housing bubbles in Ireland and Spain, based on the selection of two most-different cases that nonetheless share a common outcome of interest. Both countries were exposed to the same set of changes in their international policy environment in the late 1990s and early 2000s, in the form of a low interest rate regime associated with the creation of European Monetary Union (EMU). The two countries have very different economic structures, different political decision-making profiles, and different relationships between the political and banking systems. Yet these two countries had the most extreme experience of housing bubbles during the 200os, and both suffered a similar construction-related economic collapse that ruined their respective banking systems after 2008. The paper argues that the decision-making taking place within their very different domestic institutional frameworks was subordinated to the fact that they shared a similar form of international vulnerability. Both were extremely open to mobile international capital during the 2000s. Their vulnerability to financialization resulted in a common experience of very rapid asset price inflation, which left both countries particularly exposed when the international financial collapse took place. The shared experience of European ‘peripherality’ meant that two countries belonging to different ‘varieties of capitalism’ ended up with very similar kinds of economic collapse.
LanguageEnglish
Place of PublicationDublin
Number of pages57
Publication statusPublished - Oct 2013

Publication series

NameDiscussion Paper Series
PublisherUCD Geary Institute
No.WP2013/18

Fingerprint

Ireland
political economy
money
Spain
housing
Economics
Decision making
banking
vulnerability
political decision making
experience
EEMU
economic structure
interest rate
inflation
economics
capitalist society
assets
decision making
Housing bubble

Keywords

  • easy money
  • political economy
  • housing bubbles
  • ireland
  • spain
  • housing development

Cite this

Dellepiane Avellaneda, S., Hardiman, N., & Las Heras, J. (2013). Building on Easy Money: The Political Economy of Housing Bubbles in Ireland and Spain. (Discussion Paper Series; No. WP2013/18). Dublin.
Dellepiane Avellaneda, Sebastian ; Hardiman, Niamh ; Las Heras, Jon. / Building on Easy Money : The Political Economy of Housing Bubbles in Ireland and Spain. Dublin, 2013. (Discussion Paper Series; WP2013/18).
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Dellepiane Avellaneda, S, Hardiman, N & Las Heras, J 2013 'Building on Easy Money: The Political Economy of Housing Bubbles in Ireland and Spain' Discussion Paper Series, no. WP2013/18, Dublin.

Building on Easy Money : The Political Economy of Housing Bubbles in Ireland and Spain. / Dellepiane Avellaneda, Sebastian; Hardiman, Niamh; Las Heras, Jon.

Dublin, 2013. (Discussion Paper Series; No. WP2013/18).

Research output: Working paperDiscussion paper

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Dellepiane Avellaneda S, Hardiman N, Las Heras J. Building on Easy Money: The Political Economy of Housing Bubbles in Ireland and Spain. Dublin. 2013 Oct. (Discussion Paper Series; WP2013/18).