The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics - 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 Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics write by Mr.Joong Kang. This book was released on 2013-07-17. The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics available in PDF, EPUB and Kindle. Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries.
The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics
The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics - 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 Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics write by Joong Shik Kang. This book was released on 2013. The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics available in PDF, EPUB and Kindle. Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries.
Progress Towards External Adjustment in the Euro Area Periphery and the Baltics
Progress Towards External Adjustment in the Euro Area Periphery and the Baltics - 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 Progress Towards External Adjustment in the Euro Area Periphery and the Baltics write by Mr.Joong S Kang. This book was released on 2014-07-22. Progress Towards External Adjustment in the Euro Area Periphery and the Baltics available in PDF, EPUB and Kindle. The euro area periphery countries and the Baltic countries, which had large current account deficits in the run-up to the crisis, needed adjustment of relative prices to achieve both internal and external balances. Thus far, tangible progress has been made through lower wages and/or higher productivity relative to trading partners (“internal devaluation”), which contributed to narrowing current account deficits and shifting output towards the tradables sector. While some early adjusters cut wages more rapidly followed by productivity improvement, others have only slowly improved productivity largely through labor shedding. This adjustment for most countries has come along with a substantial recession as the unit labor cost improvement has largely come from falling employment and much of the current account improvement from import compression. Going forward, these countries still need to generate growing tradables sector employment and to continue adjustment to prevent imbalances from returning as output gaps close.
Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments
Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments - 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 Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments write by Mr.Thierry Tressel. This book was released on 2014-07-22. Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments available in PDF, EPUB and Kindle. The paper examines progress with the external rebalancing of euro area deficit countries. Relative prices are adjusting at different pace across countries and with different compositions of wage cuts and labor shedding. There is so far limited evidence of resource re-allocation from non-tradable to tradable sectors, while improved export performance is still dependent on external demand from the rest of world. Current account adjustments have taken place, reflecting structural changes but also cyclical forces, suggesting that part of the improvements may unwind when cyclical conditions improve. Looking ahead, relying only on relative price adjustments (which adversely affects demand) to rebalance the euro area could prove very challenging. Structural reforms will play an important role in the reallocation of resources to the tradable sector and the associated relative price adjustment, while boosting non-price and price competitiveness.
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.
