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Europe and Global Imbalances

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Author Info

  • Philip R. Lane
  • Gian-Maria Milesi-Ferretti

Abstract

Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/144.

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Length: 59
Date of creation: 01 Jun 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/144

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Keywords: Capital flows; Current account balances; current account; foreign assets; net foreign assets; currency composition; exchange rates; net foreign asset; foreign asset; financial integration; external liabilities; international financial; current account deficit; foreign asset positions; current account adjustment; net foreign asset positions; current account balance; net foreign asset position; foreign asset position; net debt; domestic currency; international financial integration; international investment; globalization; current account deficits; foreign exchange; trade patterns; balance of payments; bilateral trade; public debt; reserve bank; current accounts; foreign liabilities; international finance; current account surpluses; net external liabilities; direction of trade statistics; central banks; financial globalization; international trade; current account surplus; central bank; international balance sheet; external borrowing; reserve currency; financial markets; net debtor; global liquidity; debtor countries; debtor country; economic integration; debt service; international financial markets; external shocks; global markets; external debt; net external debt; short-term debt; currency debt; foreign debt; economic globalization; international borrowing; global integration; domestic investors; net debtors; return on foreign assets; long-term debt; government debt; debt-equity; international financial flows; debt accumulation; trade integration; domestic currencies;

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References

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  1. Menzie Chinn & Jeffrey Frankel, 2005. "Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?," NBER Working Papers 11510, National Bureau of Economic Research, Inc.
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  13. International Monetary Fund, 2005. "New Rates From New Weights," IMF Working Papers 05/99, International Monetary Fund.
  14. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2007. "Capital flows to central and Eastern Europe," Emerging Markets Review, Elsevier, vol. 8(2), pages 106-123, May.
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  18. Gourinchas, Pierre-Olivier & Rey, Hélène, 2005. "International Financial Adjustment," Center for International and Development Economics Research, Working Paper Series qt124628cx, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  19. Edwin M. Truman & Anna Wong, 2006. "The Case for an International Reserve Diversification Standard," Working Paper Series WP06-2, Peterson Institute for International Economics.
  20. Richard H. Clarida, 2006. "G7 Current Account Imbalances: Sustainability and Adjustment," NBER Working Papers 12194, National Bureau of Economic Research, Inc.
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  23. Cedric Tille, 2003. "The impact of exchange rate movements on U.S. foreign debt," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Jan).
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Citations

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Cited by:
  1. International Monetary Fund, 2010. "European Financial Linkages," IMF Working Papers 10/295, International Monetary Fund.
  2. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2011. "External Adjustment and the Global Crisis," CEPR Discussion Papers 8546, C.E.P.R. Discussion Papers.
  3. Guy Meredith, 2007. "Debt Dynamics and Global Imbalances," IMF Working Papers 07/4, International Monetary Fund.
  4. Traistaru-Siedschlag, Iulia, 2007. "Macroeconomic Adjustment in Ireland under the EMU," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2007(1-Spring), pages 78-92.
  5. Ranaldo, Angelo, 2009. "Segmentation and time-of-day patterns in foreign exchange markets," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2199-2206, December.
  6. Philip Lane, 2007. "The Swedish external position and the krona," International Economics and Economic Policy, Springer, vol. 4(3), pages 263-279, November.
  7. Robert Kollmann & Nicolas Coeurdacier & Philippe Martin, 2009. "International portfolios with supply, demand and redistributive shocks," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  8. Luigi Bonatti & Andrea Fracasso, 2013. "The German Model and the European Crisis," Journal of Common Market Studies, Wiley Blackwell, vol. 51(6), pages 1023-1039, November.
  9. Fritz Breuss & Werner Roeger & Jan in 't Veld, 2008. "Global Impact of a Shift in Foreign Reserves to Euros," European Economy - Economic Papers 345, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  10. Philip R. Lane, 2008. "The Macroeconomics of Financial Integration: A European Perspective," The Institute for International Integration Studies Discussion Paper Series iiisdp265, IIIS.
  11. Nicolas Stoffels & Cédric Tille, 2007. "Why are Switzerland's foreign assets so low? The growing financial exposure of a small open economy," Staff Reports 283, Federal Reserve Bank of New York.
  12. Luigi Bonatti & Andrea Fracasso, 2013. "Origins and prospects of the Euro existential crisis," DEM Discussion Papers 2013/03, Department of Economics and Management.

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