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fiscal policy

In this paper, Paul De Grauwe documents the fact that, compared to the other EU-countries, the Portuguese government made relatively cautious budgetary policy choices during the pandemic. Most EU-countries decided to take more expansionary budgetary stances than Portugal.

 

The CFP’s vice-president also finds empirical evidence suggesting that countries that used more fiscal stimulus managed to reduce the negative effects of the pandemic on GDP. This raises the question of whether the Portuguese government made the right fiscal policy choice during the pandemic.

 

The author argues that other factors than the budgetary policy stance matter in explaining growth performances. In addition, he concludes “it is probably too early to tell whether the Portuguese government made the right fiscal policy choices”. 

Other Publications . Occasional paper nº 1 . 04 May 2021