The great recession in Portugal and the portuguese financic crisis: a business cycle accounting approach

Abstract

We apply a Business Cycle Accounting exercise to Portugal, during the Great Recession, and during the Portuguese financial crisis. We conclude that the efficiency wedge, is the most important to explain the movements of output, hours worked, and investment. The investment wedge is the 2nd most important wedge when we consider the full sample. If we consider just the period before Troika, the efficiency and labor wedges are the most important. The efficiency and investment wedges are influenced by mostly the same factors while the labor wedge reflects movements in total employment during this analyzed period.