Accession to the European Union, Interest Rates and Indebtedness: Greece and Portugal
The increase in both public and private indebtedness has been one of the main macroeconomic developments in recent years. This trend has been accompanied by large current account deficits, especially in smaller countries, such as Greece and Portugal. One possible explanation for this behaviour is the reduction in interest rates that convergence to the European single currency produced. At the same time as interest rates declined, these countries experienced a strong increase in domestic demand and a real exchange rate appreciation. Adoption of the euro implied that the appreciation of the real exchange rate could not be compensated by means of nominal devaluations, resulting in reduced competitiveness. In this paper we study the macroeconomic performance of Greece and Portugal during the process of convergence to the single currency and their prospects, in the light of the current financial crisis. To this end we make use of a consumption model developed by Gabriel Fagan and Vítor Gaspar. The experience of these two countries may give important lessons for candidate countries.
|Date of creation:||Dec 2010|
|Contact details of provider:|| Postal: Av. Dias da Silva 165; 3004-512 Coimbra|
Fax: + 351 239 40 35 11
Web page: http://www.uc.pt/en/feuc/gemf/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carlos Marinheiro, 2006. "The sustainability of Portuguese fiscal policy from a historical perspective," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(2), pages 155-179, June.
- Fernando Alexandre & Pedro Bação & João Cerejeira & Miguel Portela, 2011.
"Employment and Exchange Rates: The Role of Openness and Technology,"
Open Economies Review,
Springer, vol. 22(5), pages 969-984, November.
- Alexandre, Fernando & Bação, Pedro & Cerejeira, João & Portela, Miguel, 2009. "Employment and Exchange Rates: The Role of Openness and Technology," IZA Discussion Papers 4191, Institute for the Study of Labor (IZA).
- Fernando Alexandre & Pedro Bação & João Cerejeira & Miguel Portela, 2009. "Employment and exchange rates: the role of openness and technology," GEMF Working Papers 2009-08, GEMF, Faculty of Economics, University of Coimbra.
- Fernando Alexandre & Pedro Bação & João Cerejeira & Miguel Portela, 2009. "Employment and Exchange rates: the Role of Openness and Technology," GEE Papers 0015, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2009.
- Fernando Alexandre & Pedro Bação & João Cerejeira & Miguel Portela, 2009. "Employment and exchange rates: the role of openness and technology," NIPE Working Papers 16/2009, NIPE - Universidade do Minho.
- Vítor Gaspar & Ildeberta Abreu, 1999. "Price Stability and Intermediate Targets for Monetary Policy," Working Papers w199901, Banco de Portugal, Economics and Research Department.
- Alan Ahearne & Jean Pisani-Ferry, 2006. "The Euro: only for the agile," Policy Briefs 42, Bruegel.
- Fagan, Gabriel & Gaspar, Vítor, 2007. "Adjusting to the euro," Working Paper Series 716, European Central Bank.
- António Duarte, 2009. "The Portuguese Disinflation Process: Analysis of Some Costs and Benefits," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(1), pages 157-173, May.
- António Portugal Duarte, 2005. "The Portuguese Disinflation Process: Analysis of Some Costs and Benefits," International Finance 0504005, EconWPA.
- Gabriel Fagan & Vítor Gaspar, 2007. "Adjusting to the Euro," Working Papers w200703, Banco de Portugal, Economics and Research Department.
- Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
- Olivier J. Blanchard, 1984. "Debt, Deficits and Finite Horizons," NBER Working Papers 1389, National Bureau of Economic Research, Inc.
- Daniel Cohen & Jacques Mélitz & Gérard Oudiz, 1988. "Le système monétaire européen et l'asymétrie franc-mark," Revue Économique, Programme National Persée, vol. 39(3), pages 667-678. Full references (including those not matched with items on IDEAS)