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Looking for a success in the euro crisis adjustment programs: the case of Portugal

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  • Ricardo Reis

    (Department of Economics School of Arts and Sciences Columbia University
    Centre for Macroeconomics (CFM))

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.

Suggested Citation

  • Ricardo Reis, 2015. "Looking for a success in the euro crisis adjustment programs: the case of Portugal," Discussion Papers 1535, Centre for Macroeconomics (CFM).
    • Handle: RePEc:cfm:wpaper:1535
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    References listed on IDEAS

    as
    1. Gabriel Fagan, 2007. "Adjusting to the Euro," Working Papers w200703, Banco de Portugal, Economics and Research Department.
    2. McQuinn, Kieran & Whelan, Karl, 2015. "Europe's Long-Term Growth Prospects: With and Without Structural Reforms," Papers WP501, Economic and Social Research Institute (ESRI).
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    5. Ricardo Reis, 2013. "The Portugese Slump and Crash and the Euro Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 143-210.
    6. Alessio Terzi, 2015. "Reform momentum and its impact on Greek growth," Policy Contributions 7787, Bruegel.
    7. Pedro Lains, 2008. "The Portuguese Economy in the Irish Mirror, 1960–2004," Open Economies Review, Springer, vol. 19(5), pages 667-683, November.
    8. Duffy, David & FitzGerald, John & Timoney, Kevin & Byrne, David, 2014. "Quarterly Economic Commentary, Spring 2014," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20141, June.
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    10. Luís Fonseca, 2015. "Central Bank Interventions, Demand for Collateral, and Sovereign Borrowing Costs," Working Papers w201509, Banco de Portugal, Economics and Research Department.
    11. Athanasios Orphanides, 2015. "The Euro Area Crisis Five Years After the Original Sin," Credit and Capital Markets, Credit and Capital Markets, vol. 48(4), pages 535-565.
    12. Julian Schumacher & Beatrice Weder di Mauro, 2015. "Greek Debt Sustainability and Official Crisis Lending," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 279-305.
    13. International Monetary Fund, 2012. "Romania: Fifth Review Under the Stand-By Arrangement: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Romania," IMF Staff Country Reports 2012/157, International Monetary Fund.
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    Cited by:

    1. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
    2. Alessio Terzi, 2019. "The Euro Crisis and Economic Growth: A Novel Counterfactual Approach," CESifo Working Paper Series 7746, CESifo.
    3. Terzi, Alessio, 2020. "Macroeconomic adjustment in the euro area," European Economic Review, Elsevier, vol. 128(C).
    4. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Post-Print hal-02381560, HAL.
    5. Olivier Blanchard & Pedro Portugal, 2017. "Boom, slump, sudden stops, recovery, and policy options. Portugal and the Euro," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 16(3), pages 149-168, December.
    6. repec:hal:spmain:info:hdl:2441/1divsbu8t888r9vqektjbmlqoa is not listed on IDEAS
    7. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2017. "Heterogeneity in the debt-growth nexus: Evidence from EMU countries," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 470-486.
    8. Thorsten Beck & Samuel Da-Rocha-Lopes & André F Silva & Francesca Cornelli, 2021. "Sharing the Pain? Credit Supply and Real Effects of Bank Bail-ins [High wage workers and high wage firms]," The Review of Financial Studies, Society for Financial Studies, vol. 34(4), pages 1747-1788.
    9. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017. "The European Trust Crisis and the Rise of Populism," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
    10. Samuel Verevis & Murat Üngör, 2021. "What has New Zealand gained from The FTA with China?: Two counterfactual analyses†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.
    11. Nataliya Yu. Tanyushcheva, 2019. "Background of Anti-Money Laundering Regulation in Modern Economic Theory," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 96-107, December.
    12. Jorge Sinval & M. Joseph Sirgy & Dong-Jin Lee & João Marôco, 2020. "The Quality of Work Life Scale: Validity Evidence from Brazil and Portugal," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(5), pages 1323-1351, November.
    13. repec:hal:spmain:info:hdl:2441/2i9jel1usb85nr2j7tejsaldfu is not listed on IDEAS
    14. Mitali Das, 2023. "Probabilistic assessment of external sustainability in Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(1), pages 5-29, January.

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    More about this item

    JEL classification:

    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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