The Erosion of Public Capital in Portugal

Miguel Faria-e-Castro

No 2026-016, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This article documents the erosion of Portugal’s public capital stock since 2013 and assesses its macroeconomic implications. I extend the IMF capital series through 2027 using European Commission data and construct scenarios through 2035 for alternative infrastructure-project pipelines. In 2026, the stock is projected to remain 12.2 percent below its 2013 peak, while its ratio to GDP is projected to fall from 77.2 percent in 2013 to 52.6 percent. Short-horizon regressions show positive co-movement between public-capital and labor-productivity growth. A calibrated production-function exercise suggests that the capital decline may reduce 2026 GDP per capita by 0.7–5.3 percent, with a central estimate of 1.4 percent. Announced investment projects slow, but do not reverse, the projected decline in the capital-to-GDP ratio.

Keywords: public investment; public capital; infrastructure; Portugal; fiscal policy (search for similar items in EconPapers)
JEL-codes: E22 H50 H54 O47 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2026-08-10
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.20955/wp.2026.016 Full text (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:fip:fedlwp:103629

Ordering information: This working paper can be ordered from

DOI: 10.20955/wp.2026.016

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of St. Louis Contact information at EDIRC.
Bibliographic data for series maintained by Scott St. Louis ().