What is it about?
Portugal is a member of the group of peripheral economies designated by investors as the ‘PIIGS’. Based on an extended time horizon, 1974-2014, we analyze the behavior of the Gross Domestic Product (GDP) and public debt of Portugal, and compare this with the average of the PIIGS. This reveals that in the last four decades, in Portugal, as well as in the average of the ‘PIIGS’, the public debt grew more rapidly than the wealth produced. A second aim of the study was to explore empirically the relationship between economic growth and public debt. In the light of the empirical results, we can confirm that in the last four decades there has been a negative relationship between economic growth and public debt, both in Portugal, and in the ‘PIIGS’ average.
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Why is it important?
The work is presented in four sections. After the introduction, Section 2 presents a brief framework within which to understand the relationship between economic growth and public debt in Portugal, and in the PIIGS in the period 1974-2014. In Section 3, the same relationship is empirically studied by estimating a simple linear regression using the ordinary least squares (OLS) method. Finally, the main conclusions are presented.
Perspectives
Based on an extended time horizon, last four decades (1974-2014), it was possible to identify a downward trend in real growth of Portuguese GDP, since the end of last century.
Prof. António Portugal Duarte
University of Coimbra, Faculty of Economics
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This page is a summary of: Economic Growth and Public Indebtedness in the Last Four Decades: Is Portugal different from the other PIIGS’ economies?, Naše gospodarstvo/Our economy, January 2015, De Gruyter,
DOI: 10.1515/ngoe-2015-0021.
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