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Portugal in the Eurozone: Evolution and Expectations

Author

Listed:
  • Pedro Bação
  • Sara Cerdeira
  • António Portugal Duarte

Abstract

At the time of joining the European Economic Community (precursor to the European Union) and the Eurozone, Portuguese agents were very optimistic about the level of development that the country would be able to achieve as a result of being a member of those economic areas. In this paper we describe the changes occurred in the Portuguese economy since joining the European Union and later the Eurozone. In addition, we provide estimates of the evolution of the expectations of Portuguese agents with respect to long-term real per capita GDP, based on a simple intertemporal macroeconomic model. Over the period under analysis, there was an impressive progress in standards of living. Before joining the euro, Portuguese agents were optimistic about long-term income. Expectations remained high until the onset of the debt crisis, at which time expectations collapsed. A slow recovery is visible in our estimates for the most recent years. JEL Codes - E64; F43; F45; O19

Suggested Citation

  • Pedro Bação & Sara Cerdeira & António Portugal Duarte, 2019. "Portugal in the Eurozone: Evolution and Expectations," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(si), pages 173-189, December.
    • Handle: RePEc:aic:saebjn:v:66:y:2019:i:si:p:173-189:n:170
    DOI: 10.47743/saeb-2019-0033
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    7. Havranek, Tomas & Horvath, Roman & Irsova, Zuzana & Rusnak, Marek, 2015. "Cross-country heterogeneity in intertemporal substitution," Journal of International Economics, Elsevier, vol. 96(1), pages 100-118.
    8. João Sousa Andrade, 2014. "A Crise Portuguesa é Anterior à Crise Internacional," GEMF Working Papers 2014-02, GEMF, Faculty of Economics, University of Coimbra.
    9. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    10. Pedro Bação & António Portugal Duarte & Diogo Viveiros, 2018. "An Aggregate View of Portuguese Exports and Competitiveness," CeBER Working Papers 2018-08, Centre for Business and Economics Research (CeBER), University of Coimbra.
    11. Pierre‐André Chiappori & Monica Paiella, 2011. "Relative Risk Aversion Is Constant: Evidence From Panel Data," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1021-1052, December.
    12. Robert J. Barro, 2015. "Convergence and Modernisation," Economic Journal, Royal Economic Society, vol. 125(585), pages 911-942, June.
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    14. João Sousa Andrade & António Portugal Duarte, 2011. "The Portuguese Public Finances and the Spanish Horse," GEMF Working Papers 2011-21, GEMF, Faculty of Economics, University of Coimbra.
    15. Ferraz Ricardo & Duarte António Portugal, 2015. "Economic Growth and Public Indebtedness in the Last Four Decades: Is Portugal different from the other PIIGS’ economies?," Naše gospodarstvo/Our economy, Sciendo, vol. 61(6), pages 3-11, December.
    16. João Sousa Andrade & António Portugal Duarte, 2015. "Optimum Currency Areas, Real and Nominal Convergence in the European Union," Notas Econ micas, Faculty of Economics, University of Coimbra, issue 42, pages 8-29, December.
    17. Pedro Bação & António Portugal Duarte, 2011. "Accession to the European Union, Interest Rates and Indebtedness: Greece and Portugal," Book Chapters, in: Mirjana Radovic Markovic & Srdjan Redzepagic & João Sousa Andrade & Paulino Teixeira (ed.), Serbia and the European Union: Economic Lessons from the New Member States, edition 1, volume 1, chapter 4, pages 61-76, Institute of Economic Sciences.
    18. João Sousa Andrade & António Portugal Duarte, 2014. "Output-gaps in the PIIGS Economies: An Ingredient of a Greek Tragedy," GEMF Working Papers 2014-06, GEMF, Faculty of Economics, University of Coimbra.
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    More about this item

    Keywords

    development; euro; European Union; macroeconomic expectations; Portugal;
    All these keywords.

    JEL classification:

    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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