A further view on current account, capital account and Target2 balances: Assessing the effect on capital structure and economic welfare
In this paper, we first present the state and the development of the European capital and current account imbalances. We demonstrate how large the heterogeneity among European countries is and that clustering here different types of countries is possible, but that it leads to different groupings than what has been labeled the PIGS or better GIPS countries on the one side and the GLNF countries on the other side. The same applies when it comes to cluster countries according to the debt ratio criterion. Hereafter, we put forward our own description of the mentioned ECB implicit financing scheme(s), among other things extending and complementing the recent base money market (supply and demand) analysis given by H.-W. Sinn and T. Wollmershäuser (2011). The core of the paper consists in a modified model of the New Austrian School of Economics - in the tradition of F. A. v. Hayek (1929, 1931) and in the vein of R. M. Garrison (2002) - which enables us to discuss the current distortions introduced by the Target2 credit channel into the capital markets of selected EMU countries and to detect its most important economic consequences. This part of the paper ends with a static welfare evaluation. Finally, we come up with some conclusions and suggestions for economic policy.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: Werner-Heisenberg-Weg 39, D-85577 Neubiberg|
Phone: +49(0)89 - 6004-4239
Fax: +49(0)89 - 6014693
Web page: http://wow.w3.rz.unibw-muenchen.de/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sinn, Hans-Werner & Wollmershäuser, Timo, 2012.
"Target loans, current account balances and capital flows: The ECB’s rescue facility,"
Munich Reprints in Economics
19556, University of Munich, Department of Economics.
- Hans-Werner Sinn & Timo Wollmershäuser, 2012. "Target loans, current account balances and capital flows: the ECB’s rescue facility," International Tax and Public Finance, Springer, vol. 19(4), pages 468-508, August.
- Hans-Werner Sinn & Timo Wollmershäuser, 2011. "Target Loans, Current Account Balances and Capital Flows: The ECB’s Rescue Facility," CESifo Working Paper Series 3500, CESifo Group Munich.
- Hans-Werner Sinn & Timo Wollmershaeuser, 2011. "Target Loans, Current Account Balances and Capital Flows: The ECB's Rescue Facility," NBER Working Papers 17626, National Bureau of Economic Research, Inc.
- Hans-Werner Sinn, 2011. "Target-Salden, Außenhandel und Geldschöpfung," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 64(09), pages 23-25, 05.
- Hans-Werner Sinn, 2010. "Rescuing Europe," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(SPECIALIS), pages 1-22, 08.
- Abad, José M. & Löffler, Axel & Zemanek, Holger, 2011.
"TARGET2 Unlimited: Monetary Policy Implications of Asymmetric Liquidity Management within the Euro Area,"
5904, Centre for European Policy Studies.
- Abad, José M & Loeffler, Axel & Zemanek, Holger, 2011. "TARGET2 Unlimited: Monetary Policy Implications of Asymmetric Liquidity Management within the Euro Area," MPRA Paper 31937, University Library of Munich, Germany.
- Van Marrewijk, Charles, 2012. "International Economics," OUP Catalogue, Oxford University Press, edition 2, number 9780199567096, May.
When requesting a correction, please mention this item's handle: RePEc:zbw:ubwwpe:20112. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.