Origins of persistent macroeconomic imbalances in the Euro area
AbstractIn this paper we document the growing dispersion of external and internal balances between countries in the North and South of the Euro area over the time period 1992 to 2007. We find a persistent divergence process that seems to have started with the introduction of the common currency and has its roots in the savings and investment behavior of private sectors. We dismiss the common argument in the literature that imbalances are the temporary outcome of an overall European economic convergence process and argue that future research should place greater emphasis on country heterogeneity in behavior to fully understand economic developments in the Euro area and to derive policy implications.
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Bibliographic InfoPaper provided by Utrecht School of Economics in its series Working Papers with number 10-12.
Length: 18 pages
Date of creation: 2010
Date of revision:
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Other versions of this item:
- Holinski Nils & Kool Clemens & Muysken Joan, 2010. "Origins of persistent macroeconomic imbalances in the Euro area," Research Memoranda 026, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
- F15 - International Economics - - Trade - - - Economic Integration
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-22 (All new papers)
- NEP-CBA-2010-05-22 (Central Banking)
- NEP-EEC-2010-05-22 (European Economics)
- NEP-MON-2010-05-22 (Monetary Economics)
- NEP-OPM-2010-05-22 (Open Economy Macroeconomic)
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