Studied by 2 peopleMain consequences of joining the EEC ( Trade Policies)
EU trade policies replace development or foreign policy / use of anti dumping policy / effects of trade creation and trade diversion
What was one of the biggest problem for spain’s entry into the Eu
This was due to the Common Agricultural Policy ( Spain had high percentage of labor in agriculture so recieved more european funds (france against)
What was requirment to join EEC?
7 year period where spain would reduce tariffs on its agricultural products ( Dairy,wheat or beef) until completely gone / was done to avoid the shock the common market could have on the spanish primary sector / for other products in which spain was competitive like fruit and veg the period would be 4 years / additionally quotas were imposed on olive oil, milk , sugar and wine to avoid surplus which would compromise the community budget
What is the European Union at a global level
A net trade-creating customs union
When did Spain sign the schengen agreement?
IN 1991 / The agreement guarenteed the freedom of movement of citizens of the EU
In which industry did Spain lose influence as a result of joining the EU
The fishing industry
Why is there real convergence of spain with its european partners
because of the structural and cohesion funds
Full Employment
All members of working age (Working Population) of a society and WHO WISH TO WORK can do so
How does unemployement exist?
When all members of the working population want to and can work.
Conjunctural Unemployment
Unemployement that obeys a certain recessive phase of the economic cycle
Structural Unemployment
Unemployment that exists regardless of the economic cycle
Frictional Unemployment
Unemployment in the period of time where a person leaves a job and until he joins his new job.
Can unemployment ever reach 0%
No
Most direct instrument to combat unemployment?
Fiscal Policy / Monetary is less effective due to transmission mechanisms
Do reductions in interest rate encourage invesment?
yes depending on expectations and stimulate production and unemployment
Does spain have high unemployment
Span has structurally a higher unemployment than the rest of Europe ( ATH 7.9%)
What kind of business cycle does spain have?
a amplified procyclical trend
How was spain more competitive in 2008?
an internal devaluation pushed down wages (Impossible to devalue spanish currency) , this made spain more competitive but this is not sustainable over time.
Productivity grows fast or slow?
Productivity grows at slow rates which does not favor sustained growth in wages
what also influences the slow growth of wages?
High temporality since it contributes to inequalities and strengthening of a dual labor market
What kind of policies were being carried out before the crisis?
Pro-cyclical polices / Real Interest rates became negative as a consequence of the low interest rates applied by the ECB
what kind of policies are being applied at the start of the crisis?
Pro-cyclical
In order to comply with the convergence criteria, what is applied?
an Economic austerity program / made things worse
Even though interest rates were low, what did fiscal policy do?
depressed an economy that had already entered a deep recession
What was the cost of economic recovery?
Increase in inequality / middle class destroyed and medioum and low income went to the high
Does inequality increase in economic crisis>?
Yes but it corrects as recovery takes place
in the 2008 financial crisis why did it take so long for inequality to correct ?
due to the depth of the great recession / job insecurity
Japanization
long-term stagnation and deflation. Symptoms include high unemployment, weak economic activity, interest rates near zero, quantitative easing and population aging
Note 
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