Are external accounts sustainable in Portugal?

Jorge Silva ()

No 2017/21, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This study assesses the sustainability of the Portuguese external accounts during the period 1999-2014 and the role of the public sector.There was evidence of higher import content of the non-construction investment and private investment. Therefore, the high import content of the non-construction investment was an additional challenge because its increase did not create a strong positive multiplier effect on the Portuguese economy. Exports in volume were determined by the economic growth rate of the euro area, the share of the Portuguese nominal exports in the total exports of the euro area, unit labour costs of the private sector due to the compensation of employees and real productivity, the exchange rate and the terms of trade. There was no evidence of twin deficits. Additionally, there was a negative correlation between the internal and the external balance. Furthermore, we analysed the determinants of the liabilities related to the international investment position, decomposing the external funding and identifying their determinants.

Keywords: Current account; financial markets; Portugal; international investment position; economic and financial adjustment programme (search for similar items in EconPapers)
JEL-codes: C22 F32 F34 G01 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-acc and nep-eec
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0212017

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