In honour of the fine examination weather we are having these days:
According to this morning’s Eurointelligence,
The Eurogroup will analyze to what extent past imbalances contribute to the current low growth, according to an unnamed Eurogroup official, and also whether Spain’s large current account deficit prior to the crisis can be attributed to the housing bubble, inappropriate banking supervision, or lax credit standards.
Does it make sense to attribute Spain’s current account deficit to Spanish policies alone? Be explicit about the theoretical and empirical assumptions you are making.