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Current Account Deficits in European Emerging Markets

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  • Robert Shelburne

    ()
    (United Nations Economic Commission for Europe)

Abstract

Many of the emerging market economies in Europe are presently running current account deficits which are quite high relative to any global or historical standard and are fundamentally unsustainable. This includes the three poorer European Union (EU) members of the old Europe (Greece, Portugal, and Spain), many of the EU’s new member states (largely the former transition economies which have joined since 2004), most of those non-EU members in south-east Europe, and a number of the CIS economies in eastern Europe and the Caucasus. The unweighted average current account deficit for this group has more than doubled from under four percent of GDP in 2003 to well over eight percent in 2007. This trend is significantly different than what has evolved in many of the world’s other emerging markets; these other economies have generally been running current account surpluses. This paper documents this development, describes the underlying factors that have brought it about, assesses the underlying vulnerability that has been created, and discusses the implications of this development for other emerging markets and global financial stability more generally. In addition, how these risks have evolved since the appearance of the global credit crisis beginning in the summer of 2007 is examined.

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File URL: http://www.unece.org/fileadmin/DAM/oes/disc_papers/ECE_DP_2008-2.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by UNECE in its series ECE Discussion Papers Series with number 2008_2.

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Length: 34 pages
Date of creation: Jun 2008
Date of revision:
Publication status: Published in UNECE Discussion Paper Series, No. 2008_2
Handle: RePEc:ece:dispap:2008_2

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Keywords: Current Account; Energing Markets; Europe; financing; development; transition economies; vulnerability; capital inflows;

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Cited by:
  1. Robert Shelburne, 2010. "The Global Financial Crisis and Its Impact on Trade: The World and the European Emerging Economies," ECE Discussion Papers Series 2010_2, UNECE.
  2. Gedeon Shirley, 2010. "The Political Economy of Currency Boards: Case of Bosnia and Herzegovina," South East European Journal of Economics and Business, De Gruyter Open, vol. 5(2), pages 7-20, November.
  3. Nikos Christodoulakis, 2009. "Ten years of EMU: convergence, divergence and new policy priorities," LSE Research Online Documents on Economics 23192, London School of Economics and Political Science, LSE Library.
  4. Carlos Vieira & Isabel Vieira, 2011. "Assessing the Endogeneity of OCA Conditions in EMU," CEFAGE-UE Working Papers 2011_01, University of Evora, CEFAGE-UE (Portugal).
  5. Nicos Christodoulakis & Chrysa Leventi & Manos Matsaganis & Vassilis Monastiriotis, 2011. "The Greek crisis in focus: austerity, recession and paths to recovery," LSE Research Online Documents on Economics 38380, London School of Economics and Political Science, LSE Library.

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