Adjustment with the Euro: The Difficult Case of Portugal

29 Pages Posted: 28 Feb 2006

See all articles by Olivier J. Blanchard

Olivier J. Blanchard

National Bureau of Economic Research (NBER); Peter G. Peterson Institute for International Economics

Date Written: November 11, 2006

Abstract

In the second half of the 1990s, the prospect of entry in the euro led to an output boom and large current account deficits in Portugal. Since then, the boom has turned into a slump. Current account deficits are still large, and so are budget deficits. This paper reviews the facts, the likely adjustment in the absence of major policy changes, and examines policy options.

Keywords: Unemployment, competitive disinflation, euro, productivity growth, common currency, competitiveness

JEL Classification: E24, F41, J6

Suggested Citation

Blanchard, Olivier J., Adjustment with the Euro: The Difficult Case of Portugal (November 11, 2006). MIT Department of Economics Working Paper No. 06-04. Available at SSRN: https://ssrn.com/abstract=887184 or http://dx.doi.org/10.2139/ssrn.887184

Olivier J. Blanchard (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

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