Since the beginning of Spring 2010 Portugal's economic policy has effectively ceased to be independent. To put it more accuratelly, it has lost the relative autonomy it still had. For the time being, Brussels and the European Council will be ruling Portugal and Greece (maybe Spain should also be included). We are now travelling in uncharted waters. And we don't know how long the journey is going take.
Wednesday, 12 May 2010
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This is clearly an overstatement. Even with restrictions on the overall size of the budget deficit and on the amount of public debt there is still a wide range of economic choices to be made by the government. The policy mix (spending cuts versus revenue increases)to achieve the proposed deficit and public debt goals is still in the hands of the portuguese government. Also the post, at least apparently, seems to restrict economic policy to the macroeconomic level and to the management of the overall level of aggregate demand. Any definition of Economic Policy should also include the areas related to the aggregate supply side, like the energy policy or the education policy who could be more determinant to the long run economic growth than the deficit
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