Skip to main content
SpringerLink
Log in

Business cycle and level accounting: the case of Portugal

  • Original Article
  • Published:
Portuguese Economic Journal Aims and scope Submit manuscript

Abstract

This paper studies what accounts for the recent business cycles phenomena in Portugal and why it is depressed relatively to the United States. The business accounting procedure applied here suggests that most of the changes in output per worker in Portugal over the period (mainly, from 1979 to 1991) can be attributed to changes in economic efficiency. For instance, the strong economic recovery in output per worker just after Portugal joined the European Union until the first years of the 1990s can be essentially attributed to improvements in economic efficiency. From 1979 to 2000, Portugal caught up with the industrial leader. Its output per worker is currently depressed by about 46% relative to the United States level (it was depressed by 57% in 1979). In the 1980s all of this depression in output per worker relative to the United States was due to the productivity factor. By 2000 Portugal depression relative to the United States was a mix of the French and Japanese depression. The labor factor accounted for roughly 24% of this depression, while the economic efficiency accounted by about 89%.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Alvarez F, Veracierto M (1999) Labor market policies in an equilibrium search model. NBER Macroeconomic Annual 14:263–304

    Google Scholar 

  • Antunes A, Cavalcanti T, Villamil A (2006) The effect of financial repression & enforcement on entrepreneurship and economic development. Working paper, University of Illinois, Urbana-Champaign

  • Antunes AR, Cavalcanti TV (2007) Start up costs, limited enforcement, and the hidden economy. Eur Econ Rev 51(1):203–224

    Article  Google Scholar 

  • Baer W, Leite AN (1992) The peripheral economy, its performance in isolation and with integration: The case of Portugal. Luso-Braz Rev 29(2):1–43

    Google Scholar 

  • Baer W, Leite AN (2003) The economy of Portugal within the European Union: 1990–2002. Q Rev Econ Finance 43(5):738–754

    Article  Google Scholar 

  • Bailly MN, Solow RM (2001) International productivity comparisons built from the firm level. J Econ perspect 15(3):151–172

    Article  Google Scholar 

  • Bertola G, Rogerson R (1997) Institutions and labor reallocation. Eur Econ Rev 41(6):1147–1171

    Article  Google Scholar 

  • Blanchard O, Portugal P (2001) What hides behind an unemployment rate: comparing Portuguese and US labor markets. Am Econ Rev 91:187–207

    Article  Google Scholar 

  • Cavalcanti T (2004) Layoff costs, tenure, and the labor market. Econ Lett 84(3):383–390

    Article  Google Scholar 

  • Cavalcanti T, Novo A (2005) Institutions and economic development: how strong is the relationship? Empir Econ 30(2):263–276

    Article  Google Scholar 

  • Chari VV, Kehoe PJ, McGrattan ER (2006) Business cycle accounting. Econometrica (forthcoming)

  • Correia I, Neves JC, Rebelo S (1995) Business cycles in a small open economy. Eur Econ Rev 39:1089–1113

    Article  Google Scholar 

  • Gollin D (2002) Getting income shares right. J Polit Econ 110(2)

  • Groningen Growth and Development Centre and The Conference Board (2003) Total Economy Database. http://www.ggdc.net

  • Hayashi F, Prescott E (2002) The 1990s in Japan: a lost decade. Rev Econ Dyn 5(1):206–235

    Article  Google Scholar 

  • Heston A, Summers R, Aten B (2002) Penn World Table Version 6.1. Center for International Comparisons, University of Pensylvania, PA (CICUP)

  • Jeong H, Townsend RM (2005) Sources of TFP growth: occupational choice and financial deepening. Working Paper, University of Chicago, IL

  • Lucas Jr RE (1980) Methods and problems in business cycle theory. J Money Credit Bank 12(4):696–715

    Article  Google Scholar 

  • Parente SL, Prescott E (2000) Barriers to Riches, MIT, Cambridge, MA

    Google Scholar 

  • Pinheiro M et al (1997) Séries longas para a economia portuguesa. Banco de Portugal

  • Prescott E (2002) Prosperity and depression. Am Econ Rev 92(2):1–15

    Article  Google Scholar 

  • Tauchen G (1986) Finite state Markov-Chain approximations to univariate and vector autoregressions. Econ lett 20:177–181

    Article  Google Scholar 

  • Tavares J (2004) Institutions and economic growth in Portugal: a quantitative exploration. Portuguese Economic Journal 3(1):49–79

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Departamento de Economia, Universidade Federal de Pernambuco, and INOVA, Universidade NOVA de Lisboa, Pernambuco, Brasil

    Tiago V. Cavalcanti

Authors
  1. Tiago V. Cavalcanti
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Tiago V. Cavalcanti.

About this article

Cite this article

Cavalcanti, T.V. Business cycle and level accounting: the case of Portugal. Port. Econ. J. 6, 47–64 (2007). https://doi.org/10.1007/s10258-006-0017-2

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10258-006-0017-2

JEL Classification

Keywords

Search

Navigation