Will Stability and Growth Programmes reduce the International Competitiveness and Growth in Portugal? Lessons from a country study
05/07/2011 13:00
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Elsa Vaz (Universidade de Évora)
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Resumo/Abstract: Empirical analysis shows a positive relation between growth and competitive levels. On the one hand, the most competitive economies can grow more and faster. On the other hand, high growth rates of production allow competitiveness to improve. These two achievements are the most important priorities in the European Union over the last decade. In fact, both the Lisbon Strategy from 2000 to 2010 and the Europe 2020 Strategy define them as main goals. Despite growth being the major objective of all member states, the European Monetary Union imposed the Stability and Growth Pact which demands a parsimonious use of fiscal policy in responding to shocks. Besides, to respond to the last huge shock suffered by all economies in the world, most EU countries had to implement Stability and Growth Programmes (SGP) using very restrictive options of fiscal policy. Nevertheless some studies show evidence of a negative correlation of the rate of real output growth with the increase in current public expenditure and a positive correlation of growth with the rate of increase in public capital spending and private investment. The implication is that growth and competitiveness may be at risk with SGP. Due to internal reasons as well as to the 2008 international crisis, Portugal has been recently led to use more restrictive policies in the context of the SGP. The purpose of this paper is to simulate the impact of the more recent instruments programmed at the Portuguese SGP on the competitiveness, production and GDP of the economy. A static multisectoral general equilibrium model, with multinational and single-country versions, will is used. The model allows the measurement of changes by sectors.
Outros seminários / Other seminars: Programa completo / Full programme.