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Current Account Imbalances and Real Exchange Rates in the Euro Area Author info | Abstract | Publisher info | Download info | Related research | Statistics Arghyrou, Michael G () (Cardiff Business School)
Chortareas, Georgios
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Global current account imbalances have been one of the focal points of interest for policymakers during the last few years. Less attention has been paid, however, to the diverging current account balances of the individual euro area countries. In this paper we consider the dynamics of current account adjustment and the role of real exchange rates in current account determination in the EMU. After controlling for the effects of income growth, we find the relationship between real exchange rates and the current account to be substantial in size and subject to non-linear effects. Overall, we argue that real exchange rates can offer further insights, beyond the effects of the income catch-up process, relevant to current account determination in the EMU.
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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number
E2006/23.
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Length: 29 pages
Date of creation: Sep 2006Date of revision:
Handle: RePEc:cdf:wpaper:2006/23Contact details of provider: Postal: Aberconway Building, Colum Drive, CARDIFF, CF10 3EU Phone: +44 (0) 29 20874417 Fax: +44 (0) 29 20874419 Web page: http://www.cardiff.ac.uk/carbs/econ/index.html More information through EDIRC
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Keywords: current account ; real exchange rate ; EMU ; nonlinearities ; Other versions of this item:
Find related papers by JEL classification: C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing F31 - International Economics - - International Finance - - - Foreign Exchange F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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