The authors would like to thank the participants of the conference Intra-European imbalances, global imbalances, international banking and international financial stability and two anonymous referees for helpful comments and suggestions.
Special issue: Four Generations of Global Imbalances. Guest Editors: Gunther Schnabl and Ansgar Belke
Current Account Imbalances in the Euro Area: Does Catching up Explain the Development?
Article first published online: 23 JAN 2013
© 2013 Blackwell Publishing Ltd
Review of International Economics
Special Issue: Four Generations of Global Imbalances. Guest Editors: Gunther Schnabl and Ansgar Belke
Volume 21, Issue 1, pages 6–17, February 2013
How to Cite
Belke, A. and Dreger, C. (2013), Current Account Imbalances in the Euro Area: Does Catching up Explain the Development?. Review of International Economics, 21: 6–17. doi: 10.1111/roie.12016
- Issue published online: 23 JAN 2013
- Article first published online: 23 JAN 2013
In the debate on global imbalances, the euro area countries received inreasing attention since the outbreak of the financial crisis. While the current account is on balance for the entire area, divergences between individual member states have increased since the introduction of the common currency and are part of the excessive imbalances procedure. This paper explores the determinants of the imbalances by using paneleconometric techniques. The analysis shows that a lack in competitiveness is the main explanation for the external deficits of the countries that are at the heart of the euro area debt crisis. As a deterioration of competitiveness is not feasible for the surplus countries, an asymmetric response is required to reduce the imbalances.