ESPINOSA LOYOLA, VICTOR IGNACIO

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ESPINOSA LOYOLA, VICTOR IGNACIO
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0000-0002-2481-5082
Scopus Author ID
57221851742
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      48Scopus© Citations 53
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    The political economy of fiscal dominance: Evidence from the Chilean government of Salvador Allende
    (2024)
    ESPINOSA LOYOLA, VICTOR IGNACIO  
    ;
    David O Cueva
    <jats:title>Abstract</jats:title><jats:p>This article examines the political economy of fiscal dominance during the Chilean government (1970–73) of Salvador Allende. Fiscal dominance appears when the monetary authority complies with the fiscal authority's demand to buy treasury bonds and monetise the deficit. It is argued that persistent fiscal dominance is inflationary, especially without robust fiscal and monetary rules. The Allende government financed the deficit with present taxes, debt (future taxes) and monetary issuance (inflation tax), causing the crowding‐out effect and, together with other policies such as expropriation and price controls, collapsed the demand for money, triggering hyperinflation. The lessons of Chile clarify the fiscal trigger of the inflation, stagnation, and widespread poverty that has affected Latin American countries in recent decades.</jats:p>
    Scopus© Citations 1  5
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    The central banking system paradox
    (2023)
    ESPINOSA LOYOLA, VICTOR IGNACIO  
    ;
    Miguel A. Alonso-Neira
    ;
    Jesús Huerta de Soto
    The conventions of monetary theory assume the central banking system (CBS) as the starting point for achieving the stability and efficiency of the financial system. This paper stresses the stability-efficiency thesis based on the Austrian business cycle theory (ABCT). It argues that the stability-efficiency thesis under CBS poses a paradox for two main reasons. First, central banks' interest rate handling causes business cycles, yielding the intertemporal discoordination of the money and goods markets. Second, a central bank's lender-of-last-resort role is an incentive to call for further interest rate handling, making the chance of smooth business cycles difficult or impossible. This paradox is empirically analyzed and discussed through the True Money Supply (TMS) performance in the United States's business cycle phases between 1975 and 2022. Consistent with the ABCT, the research results unlock the paradox by showing that CBS causes business cycles. Some policy implications are outlined for further research and revision of monetary theory.
    Scopus© Citations 7  5
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    Macroeconomic populism in Chile: Allende and the recession of 1973
    (Cambridge University Press (CUP), 2025-08-06)
    ESPINOSA LOYOLA, VICTOR IGNACIO  
    ;
    VEJAR HIMSALAM, VIVIANA SOLEDAD  
    <jats:title>Abstract</jats:title> <jats:p>This paper commemorates the 50th anniversary of the 1973 recession during Salvador Allende’s government by offering a comprehensive analysis of macroeconomic populism. Focusing on the lessons from this historical episode, it is argued that the lax economic policies in 1970 and 1971 triggered the boom of 1971, culminating in a financial crisis in 1972 and an economic recession in 1973. The examination encompasses an evaluation of Chilean macroeconomic populism, delving into the impact of these lax policies on the business cycle. Furthermore, it addresses prevalent misinterpretations of the 1973 recession in the context of recent Latin American events. The paper concludes by extrapolating broader insights from the Chilean experience, offering valuable lessons for shaping effective economic policies in Latin America.</jats:p>
    Scopus© Citations 1  35
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    The Ethics of Fractional-Reserve Banking System: A Private Property Rights Approach
    (2023)
    ESPINOSA LOYOLA, VICTOR IGNACIO  
    ;
    Miguel A. Alonso-Neira
    ;
    Jesús Huerta de Soto
    <jats:p>It is generally stated that the fractional-reserve banking system (FRBS) is consistent with sustainable economic growth and development. While it assumes that depositors will not be a joint demand who will claim all their money simultaneously, it supposes that a monetary aggregate greater than the monetary base will not harm economic performance. However, the FRBS’s call to central banks casts doubt on the sustainability argument and its ethical support. This article explores the FRBS from the ethics of private property, proving a radically different course to promote sustainable economic growth and development. After reviewing and discussing the ethics of private property for the FRBS and its call for central banks, the case of fiat inflation and business cycles clarifies the narrow relationship between ethics and sustainability. These findings are applied to some modern ethical dilemmas around the FRBS, proving novel avenues for policy reform and research opportunities.</jats:p>
    Scopus© Citations 2  3
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    A Free-Market Environmentalist Enquiry on Spain’s Energy Transition along with Its Recent Increasing Electricity Prices
    (2022)
    William Hongsong Wang
    ;
    ESPINOSA LOYOLA, VICTOR IGNACIO  
    ;
    Jesús Huerta de Soto
    <jats:p>This paper analyzes the Spanish energy transition’s general situation and its increasing electricity prices in recent years from a free-market environmentalist (FME) approach. We hypothesize and argue that high taxes, high government subsidies, and government industrial access restrictions breach private property rights, hindering Spain’s renewable energy (RE) development. Our paper discovers that Spain’s state-interventionist policies have increased the cost of the energy and power industries, leading to electricity prices remaining relatively high before and after the outbreak of the COVID-19 pandemic. After reviewing the literature on the FME approach and Spain’s case, a Box–Jenkins (ARIMA) model is used to clarify the economic performance of the Spanish electricity industry with a proposal for forecasting electricity prices. It is observed that Spain fails the EU and its national goal of providing an affordable energy price as a part of the green energy transition. Finally, free-market environmental solutions and policy reforms are proposed to facilitate Spain’s energy transition.</jats:p>
      3Scopus© Citations 4