On the Persistence of Trade Imbalances: Evidence from Europe
AbstractDoes exchange rate variability affect the speed of external adjustment? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro. Greater persistence is partially linked to economic and regulatory inflexibilities, such as fiscal restrictions and labor market rigidities.
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Bibliographic InfoPaper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) in its series Darmstadt Discussion Papers in Economics with number 61306.
Date of creation: 20 Mar 2013
Date of revision:
Publication status: Published in Darmstadt Discussion Papers in Economics . 217 (2013-03-20)
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More information through EDIRC
imbalances; trade balance; trade surplus; trade deficit; persistence; euro; EMU; European integration;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-18 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- repec:dar:vpaper:34447 is not listed on IDEAS
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