The Dutch Disease in the Portuguese EconomyJoão Andrade and António Portugal Duarte No 2013-05, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra Abstract: The Portuguese economy has benefited from large amounts of European structural funds since the mid-eighties. At the same time, interest rates have decreased substantially, mainly due to a credibility phenomenon. The effects of those funds and the reduction of financial costs can be considered as analogous to the phenomenon known as Dutch Disease. That is to say, the inflow of financial transfers is also considered a curse. In order to eliminate this curse we must take into account the two effects associated with Dutch Disease: the resources effect and the demand effect. Portuguese public policies have not been appropriate and have not prevented the real exchange rate appreciation, contributing to a disaster in terms of GDP growth. After a descriptive analysis of some variables, we estimate a set of equations that take account of the direct and indirect effects of structural funds and financial costs on the economy where the effects on the real exchange rate play the major role. Keywords: External Aid; Co-integration; Financial Costs; Dutch Disease; Dynamic Models; Public Policies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:gmf:wpaper:2013-05. Access Statistics for this paper More papers in GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra Contact information at EDIRC. |
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