Movatterモバイル変換

[0]ホーム
URL:

Advanced search

Browse Econ Literature

More features

IDEAS home Printed from https://ideas.repec.org/p/ptu/wpaper/w201711.html
    My bibliography Save this paper

Boom, Slump, Sudden stops, Recovery, and Policy Options. Portugal and the Euro

Author

Listed:
  • Pedro Portugal
  • Olivier Blanchard

Abstract

Over the past 20 years, Portugal has gone through a boom, a slump, a sudden stop, and now a timid recovery. Unemployment has decreased, but remains high, and output is still far below potential. Competitiveness has improved, but more is needed to keep the current account in check as the economy recovers. Private and public debt are high, both legacies of the boom, the slump and the sudden stop. Productivity growth remains low. Because of high debt and low growth, the recovery remains fragile. We review the history and the main mechanisms at work. We then review a number of policy options, from fiscal consolidation to fiscal expansion, cleaning up of non-performing loans, labor market reforms, product market reforms, and euro exit. We argue that at this point, the main focus of macroeconomic policy should be twofold. The first is the treatment of non-performing loans, which would allow for an increase in demand in the short run and an increase in supply in the medium run. We argue that, to the extent that such treatment requires recapitalization, it makes sense to finance it through an increased fiscal deficit, even in the face of high public debt. The second is product market reforms, and reforms aimed at increasing micro-flexibility in the labor market. Symmetrically, we also argue that at this point, some policies would be undesirable, among them faster fiscal consolidation, measures aimed at decreasing nominal wages and prices, and euro exit.

Suggested Citation

  • Pedro Portugal & Olivier Blanchard, 2017. "Boom, Slump, Sudden stops, Recovery, and Policy Options. Portugal and the Euro,"Working Papers w201711, Banco de Portugal, Economics and Research Department.
    • Handle:RePEc:ptu:wpaper:w201711
    as

    Download full text from publisher

    File URL:https://www.bportugal.pt/sites/default/files/anexos/papers/wp201711.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ricardo Reis, 2015."Looking for a Success in the Euro Crisis Adjustment Programs: The Case of Portugal,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 433-458.
    2. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008."Zombie Lending and Depressed Restructuring in Japan,"American Economic Review, American Economic Association, vol. 98(5), pages 1943-1977, December.
    3. Vansteenkiste, Isabel, 2017. "Did the crisis permanently scar the Portuguese labour market? Evidence from a Markov-switching Beveridge curve analysis,"Working Paper Series 2043, European Central Bank.
    4. Olivier Blanchard & Florence Jaumotte & Prakash Loungani, 2014."Labor market policies and IMF advice in advanced economies during the Great Recession,"IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    5. Ricardo Reis, 2015."Looking for a Success in the Euro Crisis Adjustment Programs: The Case of Portugal,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 433-458.
    6. Olivier Blanchard & Florence Jaumotte & Prakash Loungani, 2014."Labor market policies and IMF advice in advanced economies during the Great Recession,"IZA Journal of Labor Policy,Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    7. Olivier Blanchard & Giovanni Dell’Ariccia & Paolo Mauro, 2010."Rethinking Macroeconomic Policy,"Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(s1), pages 199-215, September.
    8. Andrea Bassanini & Stefano Scarpetta & Philip Hemmings, 2001. "Economic Growth: The Role of Policies and Institutions: Panel Data. Evidence from OECD Countries,"OECD Economics Department Working Papers 283, OECD Publishing.
    9. Ricardo Reis, 2013."The Portugese Slump and Crash and the Euro Crisis,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 143-210.
    10. Reis, Ricardo, 2015. "Looking for a success: the euro crisis adjustment programs,"LSE Research Online Documents on Economics 65868, London School of Economics and Political Science, LSE Library.
    11. Olivier Blanchard, 2007."Adjustment within the euro. The difficult case of Portugal,"Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 6(1), pages 1-21, April.
    12. Eggertsson, Gauti & Ferrero, Andrea & Raffo, Andrea, 2014."Can structural reforms help Europe?,"Journal of Monetary Economics, Elsevier, vol. 61(C), pages 2-22.
    13. repec:ptu:bdpart:b201110 is not listed on IDEAS
    14. Olivier Blanchard, 2018."Should We Reject the Natural Rate Hypothesis?,"Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 97-120, Winter.
    15. Paulo Esteves & António Rua, 2015."Is there a role for domestic demand pressure on export performance?,"Empirical Economics, Springer, vol. 49(4), pages 1173-1189, December.
    16. Olivier Blanchard & Giovanni Dell'Ariccia & Paolo Mauro, 2010."Rethinking Macroeconomic Policy,"Journal of Money, Credit and Banking,Blackwell Publishing, vol. 42(s1), pages 199-215, September.
    17. Carneiro, Anabela & Portugal, Pedro & Varejão, José, 2014."Catastrophic job Destruction during the Portuguese Economic Crisis,"Journal of Macroeconomics, Elsevier, vol. 39(PB), pages 444-457.
    18. Ricardo Reis, 2013."The Portugese Slump and Crash and the Euro Crisis,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 143-210.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by theCitEc Project, subscribe to itsRSS feed for this item.
    as


    Cited by:

    1. Daniel A. Dias & Carlos Robalo Marques, 2021."Every Cloud Has a Silver Lining: Cleansing Effects of the Portuguese Financial Crisis,"Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(2), pages 352-376, April.
    2. Diana Bonfim & Sónia Félix & Luísa Farinha, 2019."Credit and the economy: lessons from a decade of research at Banco de Portugal,"Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    3. Daniel A. Dias, 2018. "Every cloud has a silver lining: micro-level evidence on the cleansing effects of the portuguese financial crisis,"Working Papers w201818, Banco de Portugal, Economics and Research Department.
    4. Duarte, Cláudia & Maria, José R. & Sazedj, Sharmin, 2020."Trends and cycles under changing economic conditions,"Economic Modelling, Elsevier, vol. 92(C), pages 126-146.
    5. Juan Carlos Cuestas & Javier Ordóñez & Karsten Staehr, 2019."Unit labour costs and the dynamics of output and unemployment in the southern European crisis countries,"Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(3), pages 597-616, August.
    6. António Afonso & Nuno Verdial, 2019. "Sovereign debt crisis in Portugal and in Spain,"Working Papers REM 2019/0112, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    7. Barbosa, Luciana & Bonfim, Diana & Costa, Sónia & Everett, Mary, 2018."Cross-border spillovers of monetary policy: What changes during a financial crisis?,"Journal of International Money and Finance, Elsevier, vol. 89(C), pages 154-174.
    8. Alexandre, F. & Bação, P. & Cerejeira, J. & Costa, H. & Portela, M., 2022."Minimum wage and financially distressed firms: Another one bites the dust,"Labour Economics, Elsevier, vol. 74(C).
    9. Eduardo Garzón Espinosa & Bibiana Medialdea García & Esteban Cruz Hidalgo, 2021."Fiscal Policy Approaches: An Inquiring Look From The Modern Monetary Theory,"Journal of Economic Issues, Taylor & Francis Journals, vol. 55(4), pages 999-1022, October.
    10. Paulo Soares Esteves & Miguel Portela & António Rua, 2022."Does Domestic Demand Matter for Firms’ Exports?,"Open Economies Review, Springer, vol. 33(2), pages 311-332, April.
    11. Philip R. Lane, 2019."Macrofinancial Stability and the Euro,"IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(3), pages 424-442, September.
    12. Cláudia Duarte & José R. Maria & Sharmin Sazedj, 2019."Potential output: How does Portugal compare with the euro area over the last 40 years?,"Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    13. Diana Bonfim & Sujiao Zhao & Miguel A. Ferreira, 2021. "Sovereign-Bank Diabolic Loop: The Government Procurement Channel,"Working Papers w202109, Banco de Portugal, Economics and Research Department.
    14. Pierluigi, Beatrice & Sondermann, David, 2018. "Macroeconomic imbalances in the euro area: where do we stand?,"Occasional Paper Series 211, European Central Bank.
    15. repec:ptu:bdpart:e201909 is not listed on IDEAS
    16. Fernando Alexandre & Miguel Chaves & Miguel Portela, 2025."Investment grants and firms’ productivity: how effective is a grant booster shot?,"Small Business Economics, Springer, vol. 64(4), pages 1601-1641, April.
    17. Cláudia Duarte & José R. Maria & Sharmin Sazedj, 2021."Cyclical outputs and structural budget balances,"Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    18. Joao Capella-Ramos & Romina Guri, 2022. "Firm adaptation in COVID-19 times: The case of Portuguese exporting firms,"GEE Papers 0169, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Sep 2022.
    19. Alexandre, Fernando & Chaves, Miguel & Portela, Miguel, 2022. "Investment Grants and Firms' Productivity: How Effective Is a Grant Booster Shot?,"IZA Discussion Papers 15779, Institute of Labor Economics (IZA).
    20. repec:ptu:bdpart:e202105 is not listed on IDEAS
    21. repec:ptu:bdpart:e201906 is not listed on IDEAS
    22. 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.
    23. Diana Bonfim & Miguel A. Ferreira & Francisco Queiro & Sujiao (Emma) Zhao, 2023. "Fiscal policy and credit supply: The procurement channel,"Nova SBE Working Paper Series wp644, Universidade Nova de Lisboa, Nova School of Business and Economics.
    24. Mitali Das, 2023."Probabilistic assessment of external sustainability in Portugal,"Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(1), pages 5-29, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mitali Das, 2023."Probabilistic assessment of external sustainability in Portugal,"Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(1), pages 5-29, January.
    2. Samuel Verevis & Murat Üngör, 2021."What has New Zealand gained from The FTA with China?: Two counterfactual analyses†,"Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.
    3. João Ferreira do Amaral & João Carlos Lopes, 2015. "The Trade-off Unemployment Rate/External Deficit: Assessing the Economic Adjustment Program of the Troika (European Commission, ECB and IMF) for Portugal using an Input-Output Approach,"Working Papers Department of Economics 2015/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. Terzi, Alessio, 2020."Macroeconomic adjustment in the euro area,"European Economic Review, Elsevier, vol. 128(C).
    5. Dosis, Anastasios, 2025."Low interest rates, capital misallocation and welfare,"Journal of International Economics, Elsevier, vol. 157(C).
    6. Željko Bogdan Boris Cota Nataša Erjavec, 2017."Current Account Balance and Export Performances: Evidence Based on New EU Countries,"Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 20(2), pages 33-48, November.
    7. António Afonso & Jorge Silva, 2017."Current account balance cyclicality,"Applied Economics Letters, Taylor & Francis Journals, vol. 24(13), pages 911-917, July.
    8. Peydró, José-Luis & Jasova, Martina & Mendicino, Caterina & Panetti, Ettore & Supera, Dominik, 2021. "Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registe,"CEPR Discussion Papers 16549, C.E.P.R. Discussion Papers.
    9. Piotr Ciżkowicz & Andrzej Rzońca & Andrzej Torój, 2019."In Search of an Appropriate Lower Bound. The Zero Lower Bound vs. the Positive Lower Bound under Discretion and Commitment,"German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 1028-1053, November.
    10. repec:spo:wpmain:info:hdl:2441/1divsbu8t888r9vqektjbmlqoa is not listed on IDEAS
    11. Ferreira, Miguel & Adelino, Manuel & Fagandini, Paulo & Queiro, Francisco, 2020. "How Do Firms Respond to Demand Shocks? Evidence from the European Sovereign Debt Crisis,"CEPR Discussion Papers 14640, C.E.P.R. Discussion Papers.
    12. Jorge Sinval & M. Joseph Sirgy & Dong-Jin Lee & João Marôco, 2020."The Quality of Work Life Scale: Validity Evidence from Brazil and Portugal,"Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 15(5), pages 1323-1351, November.
    13. Gita Gopinath & Şebnem Kalemli-Özcan & Loukas Karabarbounis & Carolina Villegas-Sanchez, 2017."Capital Allocation and Productivity in South Europe,"The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(4), pages 1915-1967.
    14. Yann Algan & Sergei Guriev & Elias Papaioannou & Evgenia Passari, 2017."The European Trust Crisis and the Rise of Populism,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(2 (Fall)), pages 309-400.
    15. Jonas Dovern & Christopher Zuber, 2020."Recessions and Potential Output: Disentangling Measurement Errors, Supply Shocks, and Hysteresis Effects,"Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(4), pages 1431-1466, October.
    16. Olivier Blanchard & Mark Griffiths & Bertrand Gruss, 2013."Boom, Bust, Recovery: Forensics of the Latvia Crisis,"Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(2 (Fall)), pages 325-388.
    17. Piton, Sophie, 2021."Economic integration and unit labour costs,"European Economic Review, Elsevier, vol. 136(C).
    18. Diego Restuccia & Richard Rogerson, 2017."The Causes and Costs of Misallocation,"Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    19. Diana Bonfim & Sónia Félix & Luísa Farinha, 2019."Credit and the economy: lessons from a decade of research at Banco de Portugal,"Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    20. repec:ptu:bdpart:e201909 is not listed on IDEAS
    21. Andrés, Javier & Arce, Óscar & Thomas, Carlos, 2017."Structural reforms in a debt overhang,"Journal of Monetary Economics, Elsevier, vol. 88(C), pages 15-34.
    22. Olivier Blanchard & Mark Griffiths & Bertrand Gruss, 2013."Boom, Bust, Recovery Forensics of the Latvia Crisis,"Brookings Papers on Economic Activity,Economic Studies Program, The Brookings Institution, vol. 47(2 (Fall)), pages 325-388.

    More about this item

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle:RePEc:ptu:wpaper:w201711. Seegeneral information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do ithere. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    IfCitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help withthis form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in yourRePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: DEE-NTD (email available below). General contact details of provider:https://edirc.repec.org/data/bdpgvpt.html.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is aRePEc service. RePEc uses bibliographic data supplied by the respective publishers.
    [8]ページ先頭
    ©2009-2026 Movatter.jp