Looking for a Success in the Euro Crisis Adjustment Programs: The Case of Portugal

17 Pages Posted: 9 Dec 2015

See all articles by Ricardo Reis

Ricardo Reis

London School of Economics & Political Science (LSE); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: December 2015

Abstract

Portugal's adjustment program in 2010-14 under the troika was extensive and aimed at addressing its large debt and anemic growth, so it may serve as a blueprint for reforms in the Eurozone. This paper argues that, conditional on a diagnosis of the underlying problems of the Portuguese economy, the adjustment program failed to deliver in definitely addressing the problems in public finances, but succeeded in leaving promising signs of reform in the structure of the economy. In particular, on the negative side, public debt is still high, primary surpluses improved modestly, and public spending barely fell as the problem of ever-rising pension payments remained unsolved. On the positive side, unemployment fell sharply, exports and the current account balance rose, capital and labor reallocated to more productive and tradable sectors, and the country is growing faster than the EU for the first time in 15 years.

Keywords: fiscal austerity, fiscal consolidation, structural reforms

JEL Classification: E65, F44, F45, H63, O52

Suggested Citation

Reis, Ricardo A.M.R., Looking for a Success in the Euro Crisis Adjustment Programs: The Case of Portugal (December 2015). CEPR Discussion Paper No. DP10972. Available at SSRN: https://ssrn.com/abstract=2701246

Ricardo A.M.R. Reis (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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