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Current Account Imbalances and the Crisis in the Euro Area

Author

Listed:
  • Frías Pinedo, Isidro
  • Díaz Vázquez, María Rosario
  • Iglesias Casal, Ana

Abstract

In this paper we study the factors that explain the sustainability of current account imbalances in the Euro area and its relation with the economic crisis, addressing specifically the case of Spain. Estimation of foreign trade equations for Spain shows that a sustainable situation for trade imbalances could have been reached in two ways. Firstly, through an agreed actuation implemented in order to rise aggregated demand in central states over that in countries in the periphery. Secondly, controlling the pro cyclical movements promoted by monetary and credit variables.

Suggested Citation

  • Frías Pinedo, Isidro & Díaz Vázquez, María Rosario & Iglesias Casal, Ana, 2012. "Current Account Imbalances and the Crisis in the Euro Area," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 21(ex).
  • Handle: RePEc:sdo:regaec:v:21:y:2012:i:ex_7
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