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Capital Markets and External Current Accounts; What to Expect From the Euro


  • Jörg Decressin
  • Piti Disyatat


The paper compares the degree of capital market integration across euro-area countries with that across regions in Italy and provinces in Canada. Analyzing saving-investment correlations, and developing as well as fitting to the data a model of capital flows, reveal no compelling differences between the integration across countries before monetary union and that across the regions or provinces. The evidence does not suggest that EMU will prompt a major reallocation of net capital flows within the euro area that would entail sizable shifts in countries’ equilibrium current accounts.

Suggested Citation

  • Jörg Decressin & Piti Disyatat, 2000. "Capital Markets and External Current Accounts; What to Expect From the Euro," IMF Working Papers 00/154, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:00/154

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    References listed on IDEAS

    1. Barry Eichengreen & Pipat Luengnaruemitchai, 2006. "Why doesn’t Asia have bigger bond markets?," BIS Papers chapters,in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 40-77 Bank for International Settlements.
    2. Espinoza, Raphael & Prasad, Ananthakrishnan & Williams, Oral, 2011. "Regional financial integration in the GCC," Emerging Markets Review, Elsevier, vol. 12(4), pages 354-370.
    3. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    4. Serletis, Apostolos & King, Martin, 1997. "Common Stochastic Trends and Convergence of European Union Stock Markets," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(1), pages 44-57, January.
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    Cited by:

    1. repec:cii:cepiei:2015-q1-141-5 is not listed on IDEAS
    2. Soukiazis, Elias & Antunes, Micaela, 2011. "Is foreign trade important for regional growth? Empirical evidence from Portugal," Economic Modelling, Elsevier, vol. 28(3), pages 1363-1373, May.
    3. Pedro Ramos, 2007. "Does the trade balance really matter for regions?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 229-243, March.


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