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Authors
Advisor(s)
Abstract(s)
The aim of this paper is twofold. On the one hand to explain the institutional, economic
and political foundations of the Portuguese bailout in April 2011. On the other hand, to
clarify the impact of the global financial crisis (GFC) in Portuguese public finances, and the interaction between domestic fiscal policy and monitoring and recommendations
from the European Commission (EC) and the European Council (ECo). A long run
perspective (1974-2011) on management of public finances shows that Portugal has
some institutional and constitutional problems that should be sorted out in order to achieve sound public finances. Moreover, in the second half of the 90s fiscal policy was expansionary and the high conversion rate of the former currency (escudo) to the euro still hampers economic growth and competitiveness. With weak growth in the first decade of XXI century and persistent public and external deficits, Portugal came to the frontline of the negative impacts of the GFC. The total absence of political cooperation and the existence of some minority governments only made things worst. We conclude, with a brief overview of the bailout, its prospects of success, and some structural institutional measures that should be taken.
Description
Keywords
Public Finances Global Financial Crises Fiscal Policy Portugal
Pedagogical Context
Citation
Paulo Trigo Pereira e Laura Wemans. 2012. "Portugal and the global financial crisis – short-sighted politics, deteriorating public finances and the bailout imperative". Instituto Superior de Economia e Gestão - DE working papers nº 26-2012/DE/UECE
Publisher
ISEG - Departamento de Economia