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Rebalancing; Evidence from Current Account Adjustment in Europe


  • Ruben V Atoyan
  • Jonathan F Manning
  • Jesmin Rahman


After the 2003-2007 economic boom, European countries with large pre-crisis current account imbalances are undergoing adjustments. Countries are adjusting at different paces and ways reflecting the source and magnitude of imbalances, availability of financing, competitiveness of the tradable sector and external environment. While emerging European countries with large pre-crisis imbalances and a fixed exchange rate regime have seen sharp current account adjustments and a rebound in growth, adjustment in the euro zone periphery countries, which are also carrying a legacy of pre-crisis CA imbalances, has been gradual with difficulties bringing back growth. This paper is an empirical investigation of current account adjustment in Europe with a focus on these two groups, looking at contributions from cyclical and other factors, and seeking to draw policy conclusions.

Suggested Citation

  • Ruben V Atoyan & Jonathan F Manning & Jesmin Rahman, 2013. "Rebalancing; Evidence from Current Account Adjustment in Europe," IMF Working Papers 13/74, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:13/74

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    References listed on IDEAS

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    3. Holger Zemanek & Ansgar Belke & Gunther Schnabl, 2009. "Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness," Discussion Papers of DIW Berlin 895, DIW Berlin, German Institute for Economic Research.
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    9. Jesmin Rahman, 2008. "Current Account Developments in New Member States of the European Union; Equilibrium, Excess, and EU-Phoria," IMF Working Papers 08/92, International Monetary Fund.
    10. Anja Baum & Marcos Poplawski-Ribeiro & Anke Weber, 2012. "Fiscal Multipliers and the State of the Economy," IMF Working Papers 12/286, International Monetary Fund.
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    Blog mentions

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    1. Où en est l'ajustement extérieur des pays périphériques ?
      by ? in D'un champ l'autre on 2014-07-26 22:03:00


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    Cited by:

    1. Stefan Behrendt, 2014. "The Fiscal Compact and Current Account Patterns in Europe," Global Financial Markets Working Paper Series 2014-52, Friedrich-Schiller-University Jena.
    2. Hamid Raza & Gylfi Zoega & Stephen Kinsella, 2017. "Capital inflows, crisis and recovery in small open economies," Birkbeck Working Papers in Economics and Finance 1709, Birkbeck, Department of Economics, Mathematics & Statistics.
    3. Friesenbichler, Klaus & Glocker, Christian, 2017. "Tradability and productivity growth differentials across EU member states," MPRA Paper 83382, University Library of Munich, Germany.
    4. Angelini, Elena & Ca' Zorzi, Michele & Forster, Katrin, 2014. "External and macroeconomic adjustment in the larger euro area countries," Working Paper Series 1647, European Central Bank.
    5. Iancu, Aurel & Olteanu, Dan, 2015. "Fiscal Consolidation by Austerity and EU Surveillance Policies," Working Papers of National Institute of Economic Research 151209, National Institute of Economic Research.
    6. International Monetary Fund, 2015. "Bulgaria; Selected Issues Paper," IMF Staff Country Reports 15/120, International Monetary Fund.
    7. Muneesh Kapur & Rakesh Mohan, 2014. "India’s Recent Macroeconomic Performance; An Assessment and Way Forward," IMF Working Papers 14/68, International Monetary Fund.
    8. Yýlmaz Akyüz, 2014. "Crisis Mismanagement in The United States And Europe: Impact On Developing Countries And Longer-Term Consequences," Working Papers 2014/3, Turkish Economic Association.
    9. Michael Landesmann & Doris Hanzl-Weiss, 2016. "Correcting external imbalances in the European economy," Chapters,in: Boosting European Competitiveness, chapter 3, pages 14-36 Edward Elgar Publishing.
    10. Joong S Kang & Jay C Shambaugh, 2013. "The Evolution of Current Account Deficits in the Euro Area Periphery and the Baltics; Many Paths to the Same Endpoint," IMF Working Papers 13/169, International Monetary Fund.
    11. di Mauro, Filippo & Pappadà, Francesco, 2014. "Euro area external imbalances and the burden of adjustment," Journal of International Money and Finance, Elsevier, vol. 48(PB), pages 336-356.
    12. Joong S Kang & Jay C Shambaugh, 2014. "Progress Towards External Adjustment in the Euro Area Periphery and the Baltics," IMF Working Papers 14/131, International Monetary Fund.
    13. Thierry Tressel & Shengzu Wang, 2014. "Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments," IMF Working Papers 14/130, International Monetary Fund.
    14. Moral-Benito, Enrique & Viani, Francesca, 2017. "An anatomy of the Spanish current account adjustment: the role of permanent and transitory factors," MPRA Paper 80079, University Library of Munich, Germany.


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