Endividamento antes e após a introdução do euro: análise ARDL do caso português[Indebtedness before and after euro: an ARDL analysis of Portugal]

As a result of the transition to monetary stability, we analyzed the real effort rate with the debt service for Portugal in a context of a decrease in nominal interest rates. Monthly time series data from January 1991 to September 2013 were used. The UECM of the ARDL model was applied which allowed capturing the long-run and short-run effects. The results suggest that the Portuguese reality has two distinct behaviors, one before and one after effecting monetary union. We detected the presence of different variables in explaining the level of indebtedness in both periods. In the first period (1991M1- 1998M12), only financial effort is relevant when explaining the level of indebtedness of the economic agents. In the second period (1999M1-2013M9) the financial depth, German balance of payments and current balance and capital account are also statistically significant in the increase of the indebtedness level. The research supports that in the first period, the increase of financial effort reduces the level of indebtedness of the economic agents. In the second period, we have the presence of a structural break, resulting from the regime change that occurred in the economy. In this period, for a decrease of financial effort there is a reduction of the indebtedness level, in the long-run. The results support that there is a regime shift around 1999, whose economic nature produced an economic impact that caused indebtedness change, before and after euro introduction. For the second period (1999M1-2013M9) we obtained a cointegration relationship between financial effort and indebtedness.