Building on easy money: the political economy of housing bubbles in Ireland and Spain

Sebastian Dellepiane Avellaneda, Niamh Hardiman, Las Heras Jon

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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.
Original languageEnglish
Number of pages56
Publication statusPublished - Sep 2013
Event7th ECPR General Conference 2013 - Bordeaux, France
Duration: 4 Sep 20137 Sep 2013


Conference7th ECPR General Conference 2013
Internet address


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


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