Konferenzbeitrag
Current account imbalances in the euro area: Catching up or competitiveness?
In the debate on global imbalances, the euro area countries did not receive much attention so far. While the current account is on balance for the entire area, divergences between individual member states have increased since the introduction of the common currency. In this paper, the imbalances are traced back to catching up and competitiveness factors using paneleconometric techniques. In line with the intertemporal approach to the current account, low income countries tend to run deficits, while rich countries realize surpluses. However, the effect diminishes, if early years are dropped from the sample. The competitiveness channel is more robust and shows the expected sign, i.e. real appreciation leads to external deficits. To restore competitiveness, a reduction of unit labour costs is on the agenda. Since a deterioration of competitiveness is not a feasible strategy for the surplus countries, an asymmetric response across countries is required in order to reduce the imbalances.
- Language
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Englisch
- Bibliographic citation
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Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2011: Die Ordnung der Weltwirtschaft: Lektionen aus der Krise - Session: Current Account Imbalances in the Euro Area ; No. B1-V3
- Classification
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Wirtschaft
Current Account Adjustment; Short-term Capital Movements
Financial Aspects of Economic Integration
Financial Markets and the Macroeconomy
- Subject
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Current account imbalances
catching up and competitiveness
euro area
- Event
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Geistige Schöpfung
- (who)
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Belke, Ansgar
Dreger, Christian
- Event
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Veröffentlichung
- (when)
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2011
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Konferenzbeitrag
Associated
- Belke, Ansgar
- Dreger, Christian
Time of origin
- 2011
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