A history of the recent deflation of capital and wages in Spain: Review of developments on economic cycle theory

Abstract

This study offers an intellectual history of the cycle theory revision, applied it to the Eurozone, with its booms and recessions, giving rise to its deflation of capital with the Great Recession of 2008. It is paid attention on the evidence of the Spanish case and its cycle, with the boom due to the incorporation of the euro, giving rise to a continuous rise in prices, generating a series of bubbles due to expansionary fiscal and monetary policies, which ended in a great recession and deflation of capital and wages. To guide this study, it has used the heterodox synthesis, which combines the contributions of the Austrian Economics (also under revision by the new generations) close to the neo-institutionalist and cultural approaches, thus allowing a better empirical illustration of economic theory.