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Improving competition in the non-tradable goods and labour markets: the Portuguese case

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  • Mourinho Félix, Ricardo
  • Almeida, Vanda
  • Castro, Gabriela

Abstract

This study assesses the macroeconomic impacts of increasing competition in the non-tradable goods and labour markets in Portugal. We lean on evidence that the maintenance of low competition in these markets may have contributed to the recent poor performance of the Portuguese economy. The analysis is performed using PESSOA, a dynamic general equilibrium model for a small-open economy integrated in a monetary union, featuring Blanchard-Yaari households, a multi-sectoral production structure and a number of nominal and real rigidities. We conclude that measures aimed at increasing competition in the Portuguese non-tradable goods and labour markets could induce important international competitiveness gains and be valuable instruments in promoting necessary adjustments within the monetary union framework. However, in the short run, real interest rates are likely to increase temporarily, driving consumption and output temporarily downwards.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13945.

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Date of creation: 25 Sep 2008
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Handle: RePEc:pra:mprapa:13945

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Keywords: competition; competitiveness; DSGE; small-open economy; Portugal;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The Lost Decade through Pessoaâ??s bespectacled eyes
    by Vasco M Carvalho in The Portuguese Economy on 2010-03-09 07:50:00
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Cited by:
  1. Gabriela Lopes de Castro & José R. Maria & Ricardo Mourinho Félix & Cláudia Braz, 2013. "Ageing and fiscal sustainability in a small euro area economy," Working Papers w201304, Banco de Portugal, Economics and Research Department.
  2. Alistair Dieppe & Stephane Dees & Pascal Jacquinot & Tohmas Karlsson & Chiara Osbat & Selin Özyurt & Igor Vetlov & Axel Jochem & Zacharias Bragoudakis & Dimitris Sideris & Patry Tello & Jean Charles , 2012. "Competitiveness and external imbalances within the euro area," Occasional Paper Series 139, European Central Bank.
  3. Schwarzmüller, Tim & Stähler, Nikolai, 2011. "Reforming the labor market and improving competitiveness: An analysis for Spain using FiMod," Discussion Paper Series 1: Economic Studies 2011,28, Deutsche Bundesbank, Research Centre.
  4. Isabel Horta Correia, 2011. "Fiscal devaluation," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.

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