Financial resource curse in the Eurozone periphery

Sebastian Dellepiane-Avellaneda, Niamh Hardiman, Jon Las Heras

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The housing booms and busts in Ireland and Spain were among the most striking episodes of the Eurozone crisis. While asset price inflation and financialization of housing was gathering pace across the developed world, these two ‘most different’ cases converged on the same outcome as the most extreme forms of construction-based bubbles. The key contributions of this paper are threefold. Firstly, we show how cheap credit can be understood as analogous to a natural resource such as oil: resource abundance generates a ‘paradox of plenty’ whereby an asset becomes a liability. Secondly, we open the black box of political pathways through which this happens, expanding our understanding of how perverse outcomes are produced. Thirdly, we account for why Spain and Ireland were more susceptible to extreme outcomes than other European countries, thereby extending our understanding of asymmetries in the political economy of the Eurozone.

Original languageEnglish
Number of pages27
JournalReview of International Political Economy
Early online date23 Mar 2021
Publication statusE-pub ahead of print - 23 Mar 2021


  • Eurozone crisis
  • financial resource curse
  • growth models
  • housing bubbles
  • Ireland
  • pathways from the periphery
  • Spain


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