The effects of CSF 1994-1999 on the Portuguese economy

This paper tries to assess the macroeconomic effects of the CSF 1994-99 on the Portuguese economy using the macroeconomic HERMIN-Portugal model. To that end, after briefly presenting the main characteristics of the model and providing an overview of the Portuguese CSF programmes, we offer a detailed description of the methodology used in the quantification of the effects of those CSF programmes. The contribution to growth of these programmes, both separately and jointly, is analysed and compared with a stylised projection of the Portuguese economy used as benchmark. A major novelty of the current work is the consideration of supply effects. The simulation exercises performed show that die CSF 1994-99 package has potentially important effects on the Portuguese economy. This work suggests that the injection of the CSF funds could trigger a response pattern that would increase die level of GDP by more than amount injected.