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- Financialisation in the european periphery and the sovereign debt crisis: the portuguese casePublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, Emanuel; Mamede, RicardoThe financial sector has acquired great prominence in most developed economies. However, some authors argue that the growth of finance is at the root of the current financial and economic difficulties. This paper aims to analyse this claim by looking at financialisation in the European periphery, focusing on the Portuguese case. The emergence of this phenomenon is contextualised from a historical, economic and international perspective. Based on the analysis of several indicators, the paper concludes that the Portuguese economy exhibits symptoms of financialisation, and that this has not only revealed the structural weaknesses of the Portuguese economy but also played an important role in the emergence of the recent Portuguese sovereign debt crisis.
- The Long Boom and the Early Bust: The Portuguese Economy in the Era of FinancialisationPublication . Barradas, Ricardo; Mamede, Ricardo; Lagoa, Sérgio; Leão, EmanuelThis chapter expands the authors’ previous work on the Portuguese financial system’s evolutions in the past three decades. In that work they extensively documented the various signs of financialisation in the Portuguese economy. Now the authors focus on the effects of financialisation in Portugal on the long-run macroeconomic development and on the financial and economic crises that hit the country in recent years. The chapter is divided in four main sections. Section 11.2 discuss the main features of the development of the Portuguese economy since the early 1980s. Section 11.3 builds an analysis by looking in greater detail at four different channels through which financialisation affects the evolution do the Portuguese economy: income distribution, investment in capital stock, private consumption and the current account. Section 11.4 addresses the crisis and section 11.5 presents the conclusions.
- Financialisation and the financial and economic crises: the case of PortugalPublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, Emanuel; Mamede, RicardoThe notion of 'financialisation' broadly refers to the growing weight of finance in contemporary economies. Taking this into account, the present study focus on the long-run macroeconomic development and recent financial and economic crisis of the Portuguese economy. Contrary to Greece, Ireland, and Spain, the dismal performance of the Portuguese economy is not solely a post-subprime crisis phenomenon. The sharp discontinuity in GDP growth around the turn of the century is a distinctive feature of Portugal in the EU context and, although several factors account for this discontinuity, the process of financialisation of the Portuguese economy is an essential part of the explanation. This process in Portugal was essentially characterised by a large increase in bank credit to the private sector, resulting from a combination of demand- and supply-side factors that produced a wide availability of credit at historically low interest rates. Thus, we suggest that the Portuguese experience can be labelled a ‘debt-led domestic demand growth’ model. However, after 2000 the Portuguese economy experienced a succession of shocks, and an exhaustion of the domestic debt-led growth at a much earlier stage than other countries, resulting in a sharp economic slowdown, with negative consequences for public finances. The high levels of public and private indebtedness were a decisive factor behind the steep rise in the Portuguese sovereign bonds interest rates between 2010 and 2012. Finally, we assess the impact of financialisation in the current account, investment, consumption, and inequality; articulating these domains with the general growth model. Our conclusion is that the increase in the importance of finance ended having a clear negative impact on the three former domains, while the negative impact on income inequality was less pronounced.
- Report on the financial system in PortugalPublication . Barradas, Ricardo; Lagoa, Sérgio; Leão, Emanuel; Mamede, RicardoThis Report assesses the extent, nature, and effects of financialisation in Portugal. It also discusses the contribution of financialisation for the crisis that presently affects the Portuguese economy. The liberalization of the banking sector, the easier access to international financial markets, and the growth of credit fostered the development of the Portuguese financial sector.