Demand rationing and capital constraints in the Spanish economy. 1964-88

We adopt a disequilibrium approach to specify and estimate a structural model for the Spanish economy centred around the labour and production sectors. Our results suggest that the predominant regimes in the late 1960s and early 1970s were repressed inflation and capital constraints; it was a period with record growth rates and low unemployment. Demand constraints appear in the late 1970s and become dominant in the early 1980s. Capital constraints again become binding from 1986 on, a period of extraordinary recovery and lowering of unemployment. An estimated measure of structural unemployment suggests that more than a third of Spanish jobless are in this category.