A Dynamic General Equilibrium Analysis of EC Structural Funds: With an Application to Portugal

• Autor(a) principal: Gaspar, Vítor
• Data de Publicação: 1992
• Outros Autores: Pereira, Alfredo M.
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/85868

The purpose of this paper is to develop a methodology for studying the impact of international unilateral transfers on the growth path of a capital importing economy. Unilateral public transfers under the EC Structural Funds Programs are an essential part of the process of integration of the new Southern European entrants. The paper develops a two sector endogenous growth model of private and public physical capital and human capital accumulation in which the public sector and the current account balances play a crucial role. The model is applied to the case of Portugal. Simulation results suggest that ongoing structural changes have a substantial and permanent impact on economic growth and contribute markedly to the process of real convergence of the Portuguese economy to EC standards. However, the impact of structural funds on public deficits, current account, and real exchange rates adversely affects the long run requirements of nominal convergence and exacerbates the need for budgetary restraint.