Deficit sustainability, and monetary versus fiscal dominance: The case of Spain, 1850-2000

In this paper, we provide a test of the sustainability of the Spanish government deficit over the period 1850-2000, emphasizing the role played by monetary and fiscal dominance in order to get fiscal solvency. Since the condition of fiscal solvency was satisfied, government deficit would have been sustainable along the sample period. In addition, the whole period can be characterized as one of fiscal dominance.