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Euro area imbalances

Author

Listed:
  • Mark Mink
  • Jan Jacobs
  • Jakob de Haan

Abstract

We argue that if currency union member states have different potential output per capita, output growth rates, or trade balances, the common monetary policy may not be optimal for all of them. Euro area imbalances for potential output and for trade balances are quite large, while output growth imbalances are more modest. Member states with larger imbalances of one type also have larger imbalances of both other types, but a decline of one imbalance need not coincide with a decline of the others. We also show that imbalances are fairly persistent, and are larger in poorer and smaller member states.

Suggested Citation

  • Mark Mink & Jan Jacobs & Jakob de Haan, 2016. "Euro area imbalances," DNB Working Papers 540, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:dnbwpp:540
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    References listed on IDEAS

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    Cited by:

    1. Jeroen Hessel & Niels Gilbert & Jasper de Jong, 2017. "Capitalising on the euro. Options for strengthening the EMU," DNB Occasional Studies 1502, Netherlands Central Bank, Research Department.

    More about this item

    Keywords

    euro area macroeconomic imbalances; common monetary policy; economic convergence; business cycle synchronization; euro crisis;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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