Columbia International Affairs Online: Policy Briefs

CIAO DATE: 05/2012

The Spanish Hangover

Cinzia Alcidi, Daniel Gros

April 2012

Centre for European Policy Studies

Abstract

Spain faces high unemployment and slow growth. This paper focuses on an important source of those problems, namely its housing market. While some adjustment has occurred since Spain's housing bubble burst in 2008, the authors find that house prices and construction need to decrease more to slow Spain's unsustainable accumulation of foreign debt.