Original Article

Portuguese Economic Journal

, Volume 6, Issue 1, pp 1-21

Open Access This content is freely available online to anyone, anywhere at any time.

Adjustment within the euro. The difficult case of Portugal

Abstract

In the second half of the 1990s, the prospect of entry in the euro led to an output boom and large current account deficits in Portugal. Since then, the boom has turned into a slump. Current account deficits are still large, and so are budget deficits. This paper reviews the facts, the likely adjustment in the absence of major policy changes, and examines policy options.

JEL Classification

E32 E65 F32 F41 J50

Keywords

Common currency Euro Appreciation Depreciation Competitiveness Current account deficit Expansion Recession Portugal Productivity growth