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The recent financial crisis has placed the concept of fiscal dominance at the center of current debates on macro-prudential policies. However, empirical evidence of fiscal dominance, understood as fiscal policy driving monetary policy, has been mixed, especially for low inflation countries. The literature hypothesizes that institutional constraints are the reason for the failure to connect deficits to money and prices in these countries. This paper, focusing on Spain 1874–1998, illustrates their constraining role in two steps. First, a recursive estimation of the link from budget to money shows howthe degree of fiscal dominance varied over time. Second, we are able to establish a connection between these changes in the intensity of fiscal dominance and changes in the intensity of the institutional (exchange rate and central bank independence) constraints.