Current Account Imbalances in the Euro Area (Draft Version). - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Current Account Imbalances in the Euro Area (Draft Version). write by Alan G. Ahearne. This book was released on 2009. Current Account Imbalances in the Euro Area (Draft Version). available in PDF, EPUB and Kindle. The dispersion in current account balances among countries in the euro area has widened markedly over the past decade-and-a-half, and especially since 1999. We decompose current account positions for euro area countries into intra-euro-area balances and extra-euroarea balances and examine the determinants of these balances. Regarding intra-euro-area balances, we present evidence that capital tends to flow from high-income euro area economies to low-income euro area economies. These flows have increased since the creation of the single currency in Europe. We construct a novel data set regarding extra-euro-area balances. The data set contains, for the euro area and the most important member economies, exports and imports to and from the 10 respective most important trade partners outside the euro area. This allows us to study the determinants of the extra-euro current account and its interaction with intra-euro area trade balances. We estimate a model of the trade balance of the euro area and individual euro-area countries with the rest of the world. We find that a real appreciation of the euro against the currencies of its main trading partners appears to have a substantial effect on the euro area's net exports in the long run, though the immediate effect is small. Our estimates for individual countries suggest that the adjustment to a real appreciation of the euro would not be equally distributed across euro-area countries. In particular, Germany would bear the largest share of the adjustment, while the other large euro-area economies would be relatively unaffected. Finally, we find that the introduction of the euro seems to have changed the dynamics of trade balance adjustment in three of the larger euro-area economies.
Adjustment in Euro Area Deficit Countries
Adjustment in Euro Area Deficit Countries - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Adjustment in Euro Area Deficit Countries write by Mr.Thierry Tressel. This book was released on 2014-07-14. Adjustment in Euro Area Deficit Countries available in PDF, EPUB and Kindle. Imbalances within the euro area have been a defining feature of the crisis. This paper provides a critical analysis of the ongoing rebalancing of euro area “deficit economies” (Greece, Ireland, Portugal, and Spain) that accumulated large current account deficits and external liability positions in the run-up to the crisis. It shows that relative price adjustments have been proceeding gradually. Real effective exchange rates have depreciated by 10-25 percent, driven largely by reductions in unit labor costs due to labor shedding. While exports have typically rebounded, subdued demand accounts for much of the reduction in current account deficits. Hence, the current account balance of the euro area as a whole has shifted into surplus. Internal rebalancing has come with subdued activity—notably very high unemployment in the deficit economies—and made continued adjustment more difficult. To advance rebalancing further, the paper emphasizes the need for: (1) macroeconomic policies that support demand and bring inflation in line with the ECB’s medium-term price stability objective; (2) continued EMU reforms (banking union) to ensure proper financial intermediation; and (3) structural reforms in product and labor markets to improve productivity and support the reallocation of resources to tradable sectors.
Europe and Global Imbalances
Europe and Global Imbalances - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Europe and Global Imbalances write by Philip R. Lane. This book was released on 2007-06. Europe and Global Imbalances available in PDF, EPUB and Kindle. Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.
Current Account Imbalances in the Southern Euro Area
Current Account Imbalances in the Southern Euro Area - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Current Account Imbalances in the Southern Euro Area write by Piyaporn Sodsriwiboon. This book was released on 2010-06-01. Current Account Imbalances in the Southern Euro Area available in PDF, EPUB and Kindle. The paper examines the causes, consequences, and potential cures of the large current account deficits in the Southern Euro Area (SEA). These were mostly driven by a decline in private saving rates. But it was the European Monetary Union and the Euro, which enabled these countries to maintain investment rates, and thus run larger current account deficits, by improving their access to the international pool of saving. The paper finds that the deficits in SEA in 2008 were larger than can be explained by fundamentals, though the situation varies substantially across countries. It also finds that although the global financial crisis has started to force some unwinding, the current account deficits are expected to remain high in the medium run, though again with substantial variation across countries. The paper argues these large external deficits pose risks to the economy and therefore matter, even in a currency union, and discusses some policy options to reduce them.
The 'imbalanced Balance' and Its Unravelling
The 'imbalanced Balance' and Its Unravelling - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The 'imbalanced Balance' and Its Unravelling write by Alexandr Hobza. This book was released on 2014. The 'imbalanced Balance' and Its Unravelling available in PDF, EPUB and Kindle. Based on a new database of bilateral financial flows among euro area countries and their major world partners, this paper explores the role of financial links in the accumulation and then adjustment of current account imbalances in the euro area. The data show that the geography of financial flows can differ quite markedly from trade flow patterns and suggest that the nexus between surpluses in the 'core' with deficits in the periphery went along financial rather than trade interlinkages. In particular, the data document the dominant role of 'core' countries in financing the euro area periphery's current account deficits before the financial crisis. In addition to direct financing, France and the UK acted as important intermediaries of financial flows from elsewhere, particularly outside of the euro area. Most of this financing took the form of debt instruments and increased the vulnerability of the recipient countries. In 2009/10, gross flows in the euro area contracted, while the net flows remained broadly unchanged. France became the periphery's main financier in 2009 and substituted the withdrawn flows from surplus countries, mainly Germany. Only when France reduced its exposure in a hasty asset withdrawal during 2011, the periphery had to rely on large ECB-mediated liabilities in order to refinance its liabilities.
