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Asymmetric regional dynamics: from bust to recovery

Author

Listed:
  • Fernando Alexandre

    (NIPE/Universidade do Minho)

  • Hélder Costa

    (NIPE/Universidade do Minho)

  • Miguel Portela

    (NIPE/Universidade do Minho and IZA Bonn)

  • Miguel Rodrigues

    (CICP/Universidade do Minho)

Abstract

Regional convergence stands out in the severe adjustment of the Portuguese economy that followed the international financial crisis. This result contrasts with increasing regional inequality in other European countries. We show that regions’ GDP growth rates of the Portuguese economy were driven by debt and exports. Our estimates suggest that differences in regional debt-to-GDP and exports-toGDP ratios resulted in asymmetric regional economic dynamics. Highly indebted regions had a more severe recession and a slower recovery. Regions more open to trade had a milder recession and a stronger recovery. Finally, our results suggest that fiscal decentralization may improve regions’ resilience.

Suggested Citation

  • Fernando Alexandre & Hélder Costa & Miguel Portela & Miguel Rodrigues, 2018. "Asymmetric regional dynamics: from bust to recovery," NIPE Working Papers 17/2018, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:17/2018
    as

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    File URL: http://www.nipe.eeg.uminho.pt/Uploads/WP_2018/NIPE_WP_17_2018.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    regional development; economic convergence; debt; exports; local government; fiscal decentralization; resilience; international financial crisis; Eurozone crisis.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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