Introduction:

The chapter is structured as follows. First, we will show the main features of the model of economic growth and economic policy registered in Spain since the beginning of democracy in 1977 until the mid-nineties.

This is a relevant element to understand the different roots of the current economic expansion. As we will see below, during the decade of the eighties and the first half of the nineties, the Spanish economic authorities implemented an orthodox strategy of economic policy, the main pillars of which were a tight monetary policy and a systematic policy to make the labour market more flexible. Second, we will focus on the bases of the economic situation and economic policy since Spain’s membership in the EMU, paying special attention to the role played by incomes policy and labour market reforms and by macroeconomic (monetary and fiscal) policies.