March 3, 2008
Spain: A stimulus package in the wrong country
by Sebastian Dullien
While the German government and German economists do not even dare seriously thinking about economic stimulus packages (with some rare exceptions – see Ulrich Fritsche's post), some other European countries are moving quickly ahead.
In most crisis scenarios for European countries with real estate bubbles to burst such as Spain or the Baltics, economists now argue that the downturn will not be overly sharp as these country's governments have ample room to manouvre. In plain English: These economists expect governments to cut taxes or increase expenditure to soften the fallout from the real estate crisis.