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Title:Can Portugal escape stagnation without opting out from the Eurozone? PDF Logo
Authors:Leao, Pedro
Palacio-Vera, Alfonso
Issue Date:2011
Series/Report no.:Working paper, Levy Economics Institute 664
Abstract:The creation of the Economic and Monetary Union (EMU) has not brought significant gains to the Portuguese economy in terms of real convergence with wealthier eurozone countries. We analyze the causes of the underperformance of the Portuguese economy in the last decade, discuss its growth prospects within the EMU, and make two proposals for urgent institutional reform of the EMU. We argue that, under the prevailing institutional framework, Portugal faces a long period of stagnation, high unemployment, and painful structural reform, and conclude that, in the absence of institutional reform of the EMU, getting out of the eurozone represents a serious political option for Portugal.
Subjects:nominal wage cuts
Eurozone
relative unit labor costs
zero-sum game
JEL:E32
E65
F32
F41
J50
Document Type:Working Paper
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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