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The Fundamentals of the Portuguese Crisis

  • João Sousa Andrade

    ()

    (University of Coimbra and GEMF)

  • Adelaide Duarte

    ()

    (University of Coimbra and GEMF)

This paper analyses the fundamentals of the Portuguese crisis. The financial crisis of 2007 worsened and triggered the current Portuguese crisis. We argue that the main problem that the economy is facing is its output stagnation due to a kind of Dutch disease that has created high and increasing levels of indebtedness, low and decreasing levels of saving and has reduced Portuguese competitiveness. Moreover, the existence of a dualist labour market and a new vague of emigration reproduces inefficiency increasing unemployment of younger workers and the supply of human capital abroad funded by the Portuguese taxpayers. Governance problems such as bad public budget governance, lack of transparency and accountability are also at stake and have to be solved to allow the economy to return to its long-run growth path.

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File URL: http://gemf.fe.uc.pt/workingpapers/pdf/2011/gemf_2011-16.pdf
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Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2011-16.

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Length: 24 pages
Date of creation: Sep 2011
Date of revision:
Publication status: Published in Panoeconomicus 58(2): 195-218, 2011.
Handle: RePEc:gmf:wpaper:2011-16
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