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A Global Value Chain Analysis of Macroeconomic Imbalances in Europe. WWWforEurope Working Paper No. 67

Author

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  • Stefan Ederer
  • Peter Reschenhofer

Abstract

This paper assesses whether or to what extent the macroeconomic imbalances, which emerged in the "North" and "South" of the European Monetary Union before the financial and economic crisis of 2008-09, are symmetric. Firstly, we calculate bilateral exports and imports between all EU member countries, applying the concept of "trade in value added", and discuss their role in the emergence of trade surpluses and deficits. Secondly, we decompose the changes in the trade balances into the effects of shifts in final demand on the one side and changes in the global production patterns on the other. Thirdly, we quantify to what extent an increase in domestic demand in the North and a decrease in the South would support the elimination of these imbalances. Finally, we calculate a hypothetical scenario in which final demand would expand similarly in all EMU countries. Thereby we evaluate how the macroeconomic imbalances would have evolved in the case of more balanced demand developments in the EMU in the past, as well as how adjustment could possibly happen in the future.

Suggested Citation

  • Stefan Ederer & Peter Reschenhofer, 2014. "A Global Value Chain Analysis of Macroeconomic Imbalances in Europe. WWWforEurope Working Paper No. 67," WIFO Studies, WIFO, number 47500, April.
    • Handle: RePEc:wfo:wstudy:47500
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    References listed on IDEAS

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    6. Arne J. Nagengast & Robert Stehrer, 2016. "Accounting for the Differences Between Gross and Value Added Trade Balances," The World Economy, Wiley Blackwell, vol. 39(9), pages 1276-1306, September.
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    11. Dietzenbacher,Erik & Lahr,Michael L. (ed.), 2008. "Wassily Leontief and Input-Output Economics," Cambridge Books, Cambridge University Press, number 9780521049436.
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    Cited by:

    1. Ederer, Stefan & Reschenhofer, Peter, 2018. "Macroeconomic imbalances and structural change in the EMU," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 59-69.
    2. Stefan Ederer & Peter Reschenhofer, 2014. "Macroeconomic Imbalances and Structural Change in the EMU. WWWforEurope Working Paper No. 69," WIFO Studies, WIFO, number 47506, April.
    3. Stefan Ederer, 2015. "Macroeconomic Imbalances and Institutional Reforms in the EMU. WWWforEurope Working Paper No. 87," WIFO Studies, WIFO, number 57896, April.
    4. Ďurčová, Júlia & Mirdala, Rajmund, 2016. "Offshoring Intensities and Skill Upgrading of Employment in the Slovak Republic," MPRA Paper 79921, University Library of Munich, Germany.

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