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TitleThe Portuguese real exchange rate, 1995-2010 : competitiveness or price effects?
Author(s)Freitas, Miguel Lebre de
Castro, Miguel de Faria e
KeywordsReal exchange rate
Unit labor costs
Issue date2014
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Abstract(s)We disentangle the extent to which the real exchange rate appreciation in Por- tugal during 1995-2010 re ected the emergence of wage-productivity misalignments or, instead, changes in the relative price of tradable and non-tradable goods. The available data suggests that the latter e ect dominated at the aggregate level. The evidence is consistent with the view that the external imbalance that character- ized the Portuguese economy during the 1990s and early 2000s was triggered by the liberalization of capital ows, and not by dysfunctional wage setting institu- tions. Using the Fundamental Equilibrium Exchange Rate approach, we nd that recent oil price shocks played an important role in explaining the real exchange rate overvaluation in Portugal.
TypeWorking paper
Publisher version
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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