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The Irrelevance of Political Party Differences for Public Finances – Evidence from Public Deficit and Debt in Portugal (1974–2012)

  • André Corrêa D’almeida (a1) and Paulo Reis Mourao (a2)


This paper attempts to empirically test whether inter-party political differences impact public finances in Portugal differently. Focused on public debt and on government budget deficit, and using data since 1974 for several variables, this paper applies econometric modelling to show that inter-party differences have had, until now, no significant impacts on the public finances’ performance in Portugal. In this context, this paper aims at dispelling some myths regarding the ‘value’ of a policy process based on political intrigue, enmity and a discourse of confrontation around differentiated political parties’ merits in modern democracies.



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43.This year (1974) is the year of the Carnation Revolution. Our data also include the years when Portugal had to fulfil the Maastricht criteria related to the Stability and Growth Pact (since 1997) and the periods of financial and economic crisis when Portuguese fiscal autonomy has been highly influenced by the International Monetary Fund (1978–1979 and 1983–1985), the European Central Bank and, the European Commission (since 2011). Therefore, we have to recognize that, since 1974, a considerable number of years can be characterized by these external influences, which put special pressures on the parties’ strategies.
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