The Trade-off Unemployment Rate/External Deficit: Assessing the Economic Adjustment Program of the Troika (European Commission, ECB and IMF) for Portugal using an Input-Output Approach

João Ferreira do Amaral and João Lopes ()

No 2015/04, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This article presents an evaluation of the economic adjustment program negotiated between the Portuguese government and the Troika (European Commission, ECB and IMF) in May 2011, with an assessment different from the usual exercises. Instead of an ex-post comparison between the actual results and the proposed targets, an ex-ante assessment of the forecast errors is made. It is shown that these errors could be avoided if the productive (input-output) structure of the economy and the unemployment/external deficit trade-off were taken into account. The main conclusion of this assessment, a large under-estimation of the unemployment rate of about 4 percentage points, illustrates the technical incompetence of this adjustment program and the huge economic and social costs it unnecessarily caused. The methodology used can easily be replicated in assessing other similar programs, such those applied in Greece, Ireland and Cyprus.

Keywords: Unemployment, External deficit; Input-output analysis; Economic adjustment program; Troika; Portugal (search for similar items in EconPapers)
JEL-codes: C67 D57 E61 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-eec and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://depeco.iseg.ulisboa.pt/wp/wp042015.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp042015

Access Statistics for this paper

More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
Bibliographic data for series maintained by Vitor Escaria ().