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Current account “Core-periphery dualism” in the EMU

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  • Tatiana Cesaroni
  • Roberta De Santis

Abstract

Current account (CA) dispersion within European Union (EU) member states has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a long run rebalancing as neoclassical theory predicts. To shed light on the issue this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the OECD and EU groups, financial integration contributed to explain CA deterioration in the peripheral countries especially in the post-EMU period. The business cycle seems to have played a growing role over time, whereas the role of competiveness seems to have diminished with respect to the past.

Suggested Citation

  • Tatiana Cesaroni & Roberta De Santis, 2015. "Current account “Core-periphery dualism” in the EMU," LEQS – LSE 'Europe in Question' Discussion Paper Series 90, European Institute, LSE.
  • Handle: RePEc:eiq:eileqs:90
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    File URL: http://www.lse.ac.uk/europeanInstitute/LEQS/LEQSPaper90.pdf
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    Citations

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    Cited by:

    1. Michele Catalano & Emilia Pezzolla, 2016. "The effects of education and aging in an OLG model: long-run growth in France, Germany and Italy," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(4), pages 757-800, November.
    2. M. Aria & G.L. Gaeta & U. Marani, 2015. "Competitiveness Gap among Regions during the Sovereign Debt Crisis: the Italian Mezzogiorno between Resistance and Surrender," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3-4, pages 399-426.
    3. repec:kap:openec:v:28:y:2017:i:5:d:10.1007_s11079-017-9463-y is not listed on IDEAS
    4. Robert Anderton & Arno Hantzsche & Simon Savsek & Máté Tóth, 2017. "Sectoral Wage Rigidities and Labour and Product Market Institutions in the Euro Area," Open Economies Review, Springer, vol. 28(5), pages 923-965, November.
    5. Roberta De Santis & Piero Esposito & Elena Masi, 2017. "Are there common structural determinants of potential output growth in Europe? An empirical exercise for 11 EMU countries," Working Papers 4, Department of the Treasury, Ministry of the Economy and of Finance.
    6. Tatiana Cesaroni & Roberta Desantis, 2017. "Dynamics of net foreign asset components in the EMU," Working Papers LuissLab 17133, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    7. Tatiana Cesaroni & Riccardo De Bonis & Luigi Infante, 2017. "On the determinants of firms’ financial surpluses and deficits," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Statistical implications of the new financial landscape, volume 43 Bank for International Settlements.
    8. Esposito, Piero & Messori, Marcello, 2016. "Improved Structural Competitiveness or Deep Recession? On the recent macroeconomic rebalances in the EMU," SEP Working Papers 2016/3, LUISS School of European Political Economy.
    9. Ansgar Belke & Clemens Domnick & Daniel Gros, 2017. "Business Cycle Synchronization in the EMU: Core vs. Periphery," Open Economies Review, Springer, vol. 28(5), pages 863-892, November.
    10. repec:psl:pslqrr:2017:23 is not listed on IDEAS
    11. Esposito, Piero, 2015. "Trade (dis)Integration and Imbalances in the EMU," SEP Working Papers 2015/7, LUISS School of European Political Economy.
    12. repec:rfe:zbefri:v:35:y:2017:i:2:p:391-424 is not listed on IDEAS
    13. repec:zag:zirebs:v:20:y:2017:i:2:p:33-48 is not listed on IDEAS
    14. Radosevic, Dubravko, 2016. "Financial Markets and Debt Crisis in European Union: Preventing spillover effects of financial crisis between EU periphery and the eurozone," MPRA Paper 78613, University Library of Munich, Germany, revised 03 Mar 2017.
    15. Tatiana Cesaroni & Riccardo De Bonis & Luigi Infante, 2017. "Firms’ financial surpluses in advanced economies: the role of net foreign direct investments," Questioni di Economia e Finanza (Occasional Papers) 411, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    current account imbalances; financial integration; EMU; core-periphery countries; panel econometric models;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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