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Global Imbalances and Imported Disinflation in the Euro Area

Author

Listed:
  • Jean Barthélemy

    (Centre de recherche de la Banque de France - Banque de France)

  • Guillaume Cléaud

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

We estimate a medium-scale DSGE model for the euro area in an open economy framework. The model includes structural trends on all variables, which allow us to estimate on gross data. We first provide a theoretical balanced growth path consistent with permanent productivity shocks, inflation target changes, and permanent shocks to the openness of the economies. We then define the cycle as the gap between this sustainable trajectory and the gross data, thus our model properly deals with deviations of the trade balance. Finally, we find persistent and strong effects from the asymmetric increase of euro area imports during the last ten years on domestic inflation. From the first quarter of 2000 to the last quarter of 2008, we estimate the contribution of the imbalanced development of international trade on euro area inflation to an average of -0,7%, and on the 3-Month interest rate to an average of -1,4%.

Suggested Citation

  • Jean Barthélemy & Guillaume Cléaud, 2011. "Global Imbalances and Imported Disinflation in the Euro Area," Working Papers hal-03461450, HAL.
    • Handle: RePEc:hal:wpaper:hal-03461450
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03461450
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    References listed on IDEAS

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    Cited by:

    1. Gregor Schwerhoff & Mouhamadou Sy, 2014. "The Non-Monetary Side of the Global Disinflation," Open Economies Review, Springer, vol. 25(2), pages 337-371, April.

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    More about this item

    Keywords

    Global Imbalances; Disinflation; Business Fluctuations; Open Economy Macroeconomics;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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