A
few days ago we got the unemployment report by the Spanish National
Statistical Institute (INE). The report says that there are 31 jobs
more than the previous month, and in an economy with almost 6
millions of unemployed people, it does not bring hope to the
Spaniards. However, other macroeconomic variables seem to indicate an
improvement on the economy, for instance, the risk premium is falling
back to the 90’s levels (+250 basis points), the stock markets are
going up, and the exports are growing fast reaching levels unseen
since 1997.
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| Source: arkansasgopwing.blogspot.com |
Most
economists and statesmen think this is the result of the economic
reforms and the decrease of the spending, and due to that, they want
to carry on with the same strategy, but macroeconomic theories do not
agree with this plan. Actually, macroeconomists recommend increasing
the spending to boost employment, but, why are they recommending
that? The explanation is long-term unemployment that brings social
exclusion and loss of skills.
The
point is that if we behold the macroeconomic variables, the spending
theory does not sound so bad. The real interest rate for the spanish government generic bond is about 2%, the average wage
is decreasing, and people have never been so qualified, so if we take
advantage of the situation borrowing and promoting the export and the
high-tech activities, we can finish with the most important problem
of this decade.
Now
that the investment is an option for the Spanish economy, will the
government take this opportunity?
Author: Christian Corro Alvarado
Editor: Raquel Guerrero Plata
