IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Current Account Imbalances in the Monetary Union and the Great Recession: Causes and Policies

  • Jorge Uxó

    ()

    (University of Castilla – La Mancha, Spain)

  • Jesús Paúl

    ()

    (CEU San Pablo University, Spain)

  • Eladio Febrero

    ()

    (University of Castilla – La Mancha, Spain)

Registered author(s):

    Current account imbalances within the eurozone are at the roots of its economic crisis. We argue that, though relevant, emphasis should shift from competitiveness to differential rates of growth of domestic demand as its chief explanatory factor. Euro core countries have experienced a shortage of domestic demand, with wage restraint playing a key role. This has led them to experience a current account surplus, which could not be understood independently of a buoyant domestic demand in the peripheral countries, funded with private debt. As a byproduct of that strong demand, the periphery suffered from wage inflation and a loss of competitiveness. This dual growth pattern is unsustainable as indebtedness cannot go on without any limit. Neither wage cuts nor fiscal austerity in the periphery will help to solve this mess: although trade balance would be restored, it would lead to a negative shock in aggregate demand, threatening their ability to settle debts at due dates.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.panoeconomicus.rs/casopis/2011_5/01%20Jorge%20Uxo.pdf
    Download Restriction: no

    Article provided by Savez ekonomista Vojvodine, Novi Sad, Serbia in its journal Panoeconomicus.

    Volume (Year): 58 (2011)
    Issue (Month): 5 (December)
    Pages: 571-592

    as
    in new window

    Handle: RePEc:voj:journl:v:58:y:2011:i:5:p:571-592
    Contact details of provider: Web page: http://www.panoeconomicus.rs/

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Jorge Uxó González & Jesús Paúl Gutiérrez, 2011. "The reform of the economic governance of the Eurozone: macroeconomic supervision and coordination," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 7(4/5/6), pages 205-225.
    2. Jesus Felipe & Utsav Kumar, 2011. "Unit Labor Costs in the Eurozone: The Competitiveness Debate Again," Economics Working Paper Archive wp_651, Levy Economics Institute.
    3. Eckhard Hein & Achim Truger, 2009. "How to Fight (or Not to Fight) a Slowdown," Challenge, M.E. Sharpe, Inc., vol. 52(3), pages 52-75, May.
    4. Eckhard Hein & Achim Truger & Till van Treeck, 2011. "The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective," IMK Working Paper 9-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:voj:journl:v:58:y:2011:i:5:p:571-592. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivana Horvat)

    The email address of this maintainer does not seem to be valid anymore. Please ask Ivana Horvat to update the entry or send us the correct address

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.