Naturally, countries must adopt policies that reinforce those spontaneous processes of adjustment by trying to prevent more serious problems to start with. As I wrote in 2000: “It can be said that the macroeconomics of a successful monetary integration is about the interiorization by economic agents of new rules regarding fiscal policy and wage behaviour.
Fiscal policy needs to keep a countercyclical role to act as a shock absorber. Wage behaviour should take as a reference wage cost developments in the euro area as a whole and should deviate from those only if there is a productivity growth differential.” In reference to Portugal, our policies did not always follow these principles.