Cape Verde’s foreign policy: an economic perspective

The virtuous cycle between development success and foreign policy in Cape Verde reflects a positive interaction between globalization and governance. Development success under globalization entails positive market perceptions regarding the orientation and predictability of policies as well as the accompanying institutional arrangements, thereby making foreign policy salient beyond the comparator group, or “aspirational”. Even if there is no universally applicable development model, an aspirational foreign policy can be built on positive rankings with respect to comparator groups. In Macedo and Pereira (2010), macrolevel policy and institutional combinations underpinning trade diversification and income convergence in West and Southern Africa are used to establish development success for Cape Verde and Mozambique respectively. Here, the narrative of long-term development helps identify the following drivers: moving towards a market economy; opening up to regional and global trade; increasing economic and political freedom; pursuing macroeconomic stability and financial reputation; ensuring policy continuity (especially in trade and industrial sectors) and focusing on human development (especially poverty reduction and education). Looking at GDP per capita and indicators of financial reputation and good governance of sub-regional peers is not sufficient to conclude that Cape Verde’s convergence will be sustained. Nevertheless, the positive interaction between trade and financial globalization, on the one hand, and democracy and good governance, on the other, have positive implications for the effectiveness of foreign policy across the region as well as in the Portuguese-speaking community.

Adjusting to external imbalances within the EMU, the case of Portugal

From 1995 to 2010 Portugal has accumulated a negative international asset position of 110 percent of GDP. In a developed and aging economy the number is astonishing and any argument to consider it sustainable must rely on extremely favorable forecasts on growth. Portuguese policy options are reduced in number: no autonomous monetary policy, no currency to devaluate, and limited discretion in changing fiscal deficits and government debt. To start the necessary deleveraging a remaining possible policy is a budget-neutral change of the tax structure that increases private saving and net exports. An increase in the VAT and a decrease in the employer’s social security contribution tax can achieve the desired outcome in the short run if they are complemented with wage moderation. To obtain a substantial improvement in competitiveness and a large decrease in consumption, the changes in the tax rates have to be large. While a precise quantitative assessment is difficult, the initial increase in the effective VAT rate needed to allow the social security tax to decrease by 16 percentage points (pp) is approximately 10 pp. Such a large increase in the effective VAT rate could be obtained by raising most of the reduced VAT rates to the new general VAT rate of 23 percent. The empirical analysis shows that over time the suggested tax swap could generate surpluses and improve the trade balance. A temporary version of the suggested tax-swap has the attractiveness to achieve a sharper increase in the private saving rate maintaining the short run gains in competitiveness. Finally, the temporary version of the fiscal devaluation could be the basis for an automatic stabilizer to external imbalances within a monetary union.Portugal has been running large current account deficits every year since 1995. These deficits have accumulated to an astonishing 110 percent of GDP negative external asset position. The sustainability of such a large external position is questionable and must rely on fantastic productivity growth expectations. The recent global financial crisis appears to have anticipated the international investors reality check on those future expectations with the result of a large increase in the cost of external financing. Today the rebalancing of the current account through an increase in national savings and an improvement in competitiveness must be at the top of the Portuguese authorities “to do” list as the cost of a pull out from international investors is of the order of 10% of GDP. The external rebalancing is difficult as the degrees of freedom of the Portuguese authorities are limited in number: they have no autonomous monetary policy, no currency to devaluate, and little discretion in fiscal policy as deficit limits and debt targets are set by the Stability Growth Pact and the postcrisis consensus on medium-term fiscal consolidation. One possibility that remains is to change the fiscal policy mix for a given budget deficit. The purpose of this paper is to explore the effects of a “fiscal devaluation”1 obtained through a tax swap between employers’ social security contributions and taxes on consumption2. The paper begins by illustrating Portugal’s current account evolution during the euro period. The second section section lays out a model to offer a qualitative assessment of the dynamic outcomes of the the tax swap. I show that the suggested tax swap can in theory achieve the desired outcomes in terms of competitiveness and consumption if complemented with moderation (stickiness) in wages. I also study the effects of a temporary version of the tax swap and show that it achieves a sharper improvement in the current account that accelerate the rebalancing. The third section moves to the empirical analysis and estimates the likely effects of the tax swap for the Portuguese economy. The fourth section concludes.

Growth and unemployment: understanding Okun's law for Portugal

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

Auto industry bailout: too big to fail. To big for whom?

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

Determinants of the Portuguese government bond yield spread

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

Credit cycle identification: A Markov-switching application

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

Opening Pousada da Serra da Estrela in Covilhã: A two-way impact analysis - interacting with private agents

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

Management of Costa Vicentina as tourism destination for foreign surf practitioner and beginners

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

Macroeconomic impacts of politics and policy: Applications to financial and real markets

A PhD Dissertation, presented as part of the requirements for the Degree of Doctor of Philosophy from the NOVA - School of Business and Economics

Health expenditures in the OECD: A political economy analysis using structural breaks

A Masters Thesis, presented as part of the requirements for the award of a Research Masters Degree in Economics from NOVA – School of Business and Economics

Clearing the cloudy crystal balls: Hybrid modelling for energy and climate change mitigation scenarios – A case study for Portugal

Dissertação para obtenção do Grau de Doutor em Ambiente

Internationalization strategy of Skypro Shoes to Japan

Skypro is a footwear brand targeted at the aviation professionals’ niche market, explored by the Portuguese microenterprise Abotoa Lda..The saturation of the Portuguese market led Skypro to expand to different worldwide countries and to be a footwear supplier of Airlines from the USA, Qatar or Australia, among others. Abotoa aims for its 2014’s exports to represent around 80% of total sales and this Internationalization Plan for Japan represents the possibility of further exploring the Asian market. Japan appears as the 2nd worldwide footwear importer and the 5th footwear consumer, with a high purchasing power – GDP per capita (PPP). This country possesses two enormous Airlines (ANA and JAL) that employ more than 15000 on-board personnel, the world’s 4th busiest Airport in 2013 (Tokyo’s Haneda International Airport) and a geographic structure with more than 6500 islands, implying high frequency of aerial transportation in the medium-run. These aspects make Japan an adequate country to invest in. At the course of this Work Project, trustworthy recommendations are provided for the current state of Abotoa and for the introduction and implementation of this Internationalization Plan. These findings strongly suggest that Skypro should indeed penetrate Japan’s market.

Fiscal policy under financial stress: A threshold VAR approach

The purpose of the project is to measure the impact of fiscal policy on the Portuguese GDP and how it may vary according to the state of the financial market. A Threshold VAR model is presented in which the two regimes are found using a financial stress index that divides the economy into a situation of financial stress and financial stability.

The determinants of Foreign Direct Investments attraction in Portugal and Spain: A comparative analysis

Double Degree. A Work Project presented as part of the requirements for the Award of a Master Degree in Management from the NOVA – School of Business and Economics and a Master Degree in Business Engineering from Louvain School of Management

Macro determinants of nonperforming loans in Portugal

This study uses a VAR methodology to evaluate the impact of the macroeconomic conditions and money supply in the fluctuation of nonperforming loans for the Portuguese economy. Additionally, the feedback effect of nonperforming loans growth to the economy and specially to the credit supply is analised. The study is motived by the hypothesis that loan quality is procyclical and that the fast growth of credit supply has a positive relation with the growth of nonperforming loans. The hypothesis that nonperforming loans reinforce economic fragilities and credit market frictions is also tested. Empirical results corroborate both hypothesis presented. Hence, it was possible to establish that the macroeconomic conditions measured by GDP and unemployment and the fast growth of credit supply contribute to the development of nonperforming loans. Furthermore, the growth of nonperforming loans reinforces the economic cycle, as it contributes to the deterioration of macroeconomic conditions and creates frictions in the credit market that may results in a credit crunch.