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Comparing post-crisis dynamics across Euro Area countries with the Global Multi-country model

Author

Listed:
  • Albonico, Alice
  • Calés, Ludovic
  • Cardani, Roberta
  • Croitorov, Olga
  • Ferroni, Filippo
  • Giovannini, Massimo
  • Hohberger, Stefan
  • Pataracchia, Beatrice
  • Pericoli, Filippo Maria
  • Raciborski, Rafal
  • Ratto, Marco
  • Roeger, Werner
  • Vogel, Lukas

Abstract

Following the global financial crisis, the Euro Area (EA) has experienced a persistent slump and notable trade balance adjustments, but with pronounced differences across EA Member States. We estimate a multi-country structural macroeconomic model to assess and compare the main drivers of GDP growth and trade balance adjustment across Germany, France, Italy, and Spain. We find that the pronounced post-crisis slump in Italy and Spain was mainly driven by positive saving shocks (‘deleveraging’) and by an increase in investment and intra-euro risk premia. Fiscal austerity in Spain and the productivity slowdown in Italy have been additional sizable contributors to the economic downturn. The results further suggest that euro depreciation, heightened intra-euro risk premia and subdued investment had a sizable impact on the trade balance reversals in Italy and Spain, which has been offset in France by a strong increase in imports and lower exports.

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  • Albonico, Alice & Calés, Ludovic & Cardani, Roberta & Croitorov, Olga & Ferroni, Filippo & Giovannini, Massimo & Hohberger, Stefan & Pataracchia, Beatrice & Pericoli, Filippo Maria & Raciborski, Rafal, 2019. "Comparing post-crisis dynamics across Euro Area countries with the Global Multi-country model," Economic Modelling, Elsevier, vol. 81(C), pages 242-273.
  • Handle: RePEc:eee:ecmode:v:81:y:2019:i:c:p:242-273
    DOI: 10.1016/j.econmod.2019.04.016
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    More about this item

    Keywords

    Post-crisis dynamics; Trade balance; EMU; Estimated DSGE; Cross-country comparison;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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