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Europe and Global Imbalances

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  • Philip R. Lane
  • Gian M Milesi-Ferretti

Abstract

Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.

Suggested Citation

  • Philip R. Lane & Gian M Milesi-Ferretti, 2007. "Europe and Global Imbalances," IMF Working Papers 07/144, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:07/144
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    Cited by:

    1. Bénétrix, Agustin S. & Lane, Philip R. & Shambaugh, Jay C., 2015. "International currency exposures, valuation effects and the global financial crisis," Journal of International Economics, Elsevier, vol. 96(S1), pages 98-109.
    2. Konrad Sobanski, 2015. "Valuation Effect As A Determinant Of The International Investment Position In Central And Eastern European Economies," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(3), pages 151-164, September.
    3. Traistaru-Siedschlag, Iulia, 2007. "Macroeconomic Adjustment in Ireland under the EMU," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2007(1-Spring), pages 78-92.
    4. Nicolas Coeurdacier & Robert Kollmann & Philippe Martin, 2009. "International Portfolios with Supply, Demand and Redistributive Shocks," NBER Chapters,in: NBER International Seminar on Macroeconomics 2007, pages 231-263 National Bureau of Economic Research, Inc.
    5. António Afonso & Florence Huart & João Tovar Jalles & Piotr Stanek, 2017. "Assessing the Sustainability of External Imbalances in the European Union," Working Papers REM 2017/01, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    6. Kwang-Myoung Hwang & Donghyun Park & Kwanho Shin, 2013. "Capital Market Openness and Output Volatility," Pacific Economic Review, Wiley Blackwell, vol. 18(3), pages 403-430, August.
    7. Lane, Philip R. & Milesi-Ferretti, Gian Maria, 2012. "External adjustment and the global crisis," Journal of International Economics, Elsevier, vol. 88(2), pages 252-265.
    8. Fritz Breuss & Werner Roeger & Jan in’t Veld, 2009. "Global impact of a shift in foreign reserves to euros," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(1), pages 101-122, February.
    9. Rudiger von Arnim, 2007. "WP 2007-7 Short-Run Adjustment in a Global Model of Current Account Imbalances," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2007-7, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    10. Georg Dettmann, 2015. "An asymmetric model on Seigniorage and the dynamics of net foreign assets," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(1), pages 41-55, March.
    11. Gelman, Maria & Jochem, Axel & Reitz, Stefan & Taylor, Mark P., 2015. "Real financial market exchange rates and capital flows," Journal of International Money and Finance, Elsevier, vol. 54(C), pages 50-69.
    12. Ranaldo, Angelo, 2009. "Segmentation and time-of-day patterns in foreign exchange markets," Journal of Banking & Finance, Elsevier, vol. 33(12), pages 2199-2206, December.
    13. Philip R. Lane, 2008. "The Macroeconomics of Financial Integration: A European Perspective," The Institute for International Integration Studies Discussion Paper Series iiisdp265, IIIS.
    14. Luigi Bonatti & Andrea Fracasso, 2013. "Origins and prospects of the Euro existential crisis," DEM Discussion Papers 2013/03, Department of Economics and Management.
    15. Nicolas Stoffels & Cédric Tille, 2007. "Why are Switzerland's foreign assets so low? The growing financial exposure of a small open economy," Staff Reports 283, Federal Reserve Bank of New York.
    16. Agnès Bénassy-Quéré & Sophie Béreau & Valérie Mignon, 2010. "On the Complementarity of Equilibrium Exchange-Rate Approaches," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 618-632, September.
    17. Luigi Bonatti & Andrea Fracasso, 2013. "The German Model and the European Crisis," Journal of Common Market Studies, Wiley Blackwell, vol. 51(6), pages 1023-1039, November.
    18. Philip Lane, 2007. "The Swedish external position and the krona," International Economics and Economic Policy, Springer, vol. 4(3), pages 263-279, November.
    19. Guy M Meredith, 2007. "Debt Dynamics and Global Imbalances; Some Conventional Views Reconsidered," IMF Working Papers 07/4, International Monetary Fund.
    20. Rizvi, Syed Aun R. & Arshad, Shaista, 2017. "Analysis of the efficiency–integration nexus of Japanese stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 470(C), pages 296-308.
    21. Carvalho, Daniel & Fidora, Michael, 2015. "Capital inflows and euro area long-term interest rates," Journal of International Money and Finance, Elsevier, vol. 54(C), pages 186-204.
    22. International Monetary Fund, 2010. "European Financial Linkages; A New Look At Imbalances," IMF Working Papers 10/295, International Monetary Fund.

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    Keywords

    Capital flows; Current account balances; Financial integration; Europe; external assets and liabilities; current account; foreign assets; net foreign assets; currency composition;

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