Asymmetric regional dynamics: from bust to recovery

Fernando Alexandre (), Hélder Costa, Miguel Portela () and Miguel Rodrigues ()
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Fernando Alexandre: NIPE/Universidade do Minho
Hélder Costa: NIPE/Universidade do Minho
Miguel Rodrigues: CICP/Universidade do Minho

No 17/2018, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: Regional convergence stands out in the severe adjustment of the Portuguese economy that followed the international financial crisis. This result contrasts with increasing regional inequality in other European countries. We show that regions’ GDP growth rates of the Portuguese economy were driven by debt and exports. Our estimates suggest that differences in regional debt-to-GDP and exports-toGDP ratios resulted in asymmetric regional economic dynamics. Highly indebted regions had a more severe recession and a slower recovery. Regions more open to trade had a milder recession and a stronger recovery. Finally, our results suggest that fiscal decentralization may improve regions’ resilience.

Keywords: regional development; economic convergence; debt; exports; local government; fiscal decentralization; resilience; international financial crisis; Eurozone crisis. (search for similar items in EconPapers)
JEL-codes: E32 E44 F34 H63 H71 H72 R11 R51 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-mac and nep-ure
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