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Portugal’s bailout and the crisis of the European Union from a capability perspective

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  • Leonardo Costa
  • Nuno Ornelas Martins
  • Francisca Guedes de Oliveira

Abstract

The global financial crisis revealed the weaknesses of the EU integration process, in general, and of the Eurozone, in particular. The EU institutions responded to the crisis in an inadequate way, in the belief that government debt stabilisation had to be pursued before the economy recovers. This strategy was based on economic forecasting errors, exposing member-states to the speculative behaviour of financial markets, leading to the bailout of countries such as Portugal, and undermining the confidence in the single currency, in the European economy and in the European project itself. We analyse here the crisis of the European Union (EU) in light of the bailout of Portugal, and propose an alternative strategy for Portugal and the EU, drawing upon Amartya Sen’s capability approach.

Suggested Citation

  • Leonardo Costa & Nuno Ornelas Martins & Francisca Guedes de Oliveira, 2016. "Portugal’s bailout and the crisis of the European Union from a capability perspective," Cambridge Journal of Economics, Oxford University Press, vol. 40(6), pages 1479-1496.
  • Handle: RePEc:oup:cambje:v:40:y:2016:i:6:p:1479-1496.
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    File URL: http://hdl.handle.net/10.1093/cje/bew007
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    Cited by:

    1. Trabelsi, Mohamed Ali & Hmida, Salma, 2017. "A Dynamic Correlation Analysis of Financial Contagion: Evidence from the Eurozone Stock Markets," MPRA Paper 83718, University Library of Munich, Germany, revised 2017.

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