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Author: Mr.Joong Kang
Publisher: International Monetary Fund
ISBN: 1475594275
Category : Business & Economics
Languages : en
Pages : 23
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Book Description
Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries.
Author: Mr.Joong Kang
Publisher: International Monetary Fund
ISBN: 1475594275
Category : Business & Economics
Languages : en
Pages : 23
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Book Description
Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries.
Author: Joong Shik Kang
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
Explanations of the large current account deficits for the euro area periphery and the Baltics in the run up to the crisis revolve around two main factors: deteriorating export performance or demand driven booms. We add that there were important movements in transfers and net income balances. While export performance remained relatively stable in most countries, for some countries, when transfers declined, households and firms borrowed so as to maintain the same level of spending. This was part of a persistent failure to adjust to trade deficits, which, along with rising net income payments, led to growing current account deficits. All of these factors played varying roles in the development of current account deficits across these countries.
Author: Alexandr Hobza
Publisher:
ISBN: 9789279361142
Category :
Languages : en
Pages : 25
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Book Description
Based on a new database of bilateral financial flows among euro area countries and their major world partners, this paper explores the role of financial links in the accumulation and then adjustment of current account imbalances in the euro area. The data show that the geography of financial flows can differ quite markedly from trade flow patterns and suggest that the nexus between surpluses in the 'core' with deficits in the periphery went along financial rather than trade interlinkages. In particular, the data document the dominant role of 'core' countries in financing the euro area periphery's current account deficits before the financial crisis. In addition to direct financing, France and the UK acted as important intermediaries of financial flows from elsewhere, particularly outside of the euro area. Most of this financing took the form of debt instruments and increased the vulnerability of the recipient countries. In 2009/10, gross flows in the euro area contracted, while the net flows remained broadly unchanged. France became the periphery's main financier in 2009 and substituted the withdrawn flows from surplus countries, mainly Germany. Only when France reduced its exposure in a hasty asset withdrawal during 2011, the periphery had to rely on large ECB-mediated liabilities in order to refinance its liabilities.
Author: Alexandr Hobza
Publisher:
ISBN: 9789279351693
Category : Balance of payments
Languages : en
Pages : 25
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Book Description
"Based on a new database of bilateral financial flows among euro area countries and their major world partners, this paper explores the role of financial links in the accumulation and then adjustment of current account imbalances in the euro area. The data show that the geography of financial flows can differ quite markedly from trade flow patterns and suggest that the nexus between surpluses in the 'core' with deficits in the periphery went along financial rather than trade interlinkages. In particular, the data document the dominant role of 'core' countries in financing the euro area periphery's current account deficits before the financial crisis. In addition to direct financing, France and the UK acted as important intermediaries of financial flows from elsewhere, particularly outside of the euro area. Most of this financing took the form of debt instruments and increased the vulnerability of the recipient countries. In 2009/10, gross flows in the euro area contracted, while the net flows remained broadly unchanged. France became the periphery's main financier in 2009 and substituted the withdrawn flows from surplus countries, mainly Germany. Only when France reduced its exposure in a hasty asset withdrawal during 2011, the periphery had to rely on large ECB-mediated liabilities in order to refinance its liabilities."--Document home page.
Author: Mr.Joong S Kang
Publisher: International Monetary Fund
ISBN: 1498339026
Category : Business & Economics
Languages : en
Pages : 31
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Book Description
The euro area periphery countries and the Baltic countries, which had large current account deficits in the run-up to the crisis, needed adjustment of relative prices to achieve both internal and external balances. Thus far, tangible progress has been made through lower wages and/or higher productivity relative to trading partners (“internal devaluation”), which contributed to narrowing current account deficits and shifting output towards the tradables sector. While some early adjusters cut wages more rapidly followed by productivity improvement, others have only slowly improved productivity largely through labor shedding. This adjustment for most countries has come along with a substantial recession as the unit labor cost improvement has largely come from falling employment and much of the current account improvement from import compression. Going forward, these countries still need to generate growing tradables sector employment and to continue adjustment to prevent imbalances from returning as output gaps close.
Author: Mr.Thierry Tressel
Publisher: International Monetary Fund
ISBN: 1498334423
Category : Business & Economics
Languages : en
Pages : 31
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Book Description
The paper examines progress with the external rebalancing of euro area deficit countries. Relative prices are adjusting at different pace across countries and with different compositions of wage cuts and labor shedding. There is so far limited evidence of resource re-allocation from non-tradable to tradable sectors, while improved export performance is still dependent on external demand from the rest of world. Current account adjustments have taken place, reflecting structural changes but also cyclical forces, suggesting that part of the improvements may unwind when cyclical conditions improve. Looking ahead, relying only on relative price adjustments (which adversely affects demand) to rebalance the euro area could prove very challenging. Structural reforms will play an important role in the reallocation of resources to the tradable sector and the associated relative price adjustment, while boosting non-price and price competitiveness.
Author: Mr.Thierry Tressel
Publisher: International Monetary Fund
ISBN: 1498362907
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
Imbalances within the euro area have been a defining feature of the crisis. This paper provides a critical analysis of the ongoing rebalancing of euro area “deficit economies” (Greece, Ireland, Portugal, and Spain) that accumulated large current account deficits and external liability positions in the run-up to the crisis. It shows that relative price adjustments have been proceeding gradually. Real effective exchange rates have depreciated by 10-25 percent, driven largely by reductions in unit labor costs due to labor shedding. While exports have typically rebounded, subdued demand accounts for much of the reduction in current account deficits. Hence, the current account balance of the euro area as a whole has shifted into surplus. Internal rebalancing has come with subdued activity—notably very high unemployment in the deficit economies—and made continued adjustment more difficult. To advance rebalancing further, the paper emphasizes the need for: (1) macroeconomic policies that support demand and bring inflation in line with the ECB’s medium-term price stability objective; (2) continued EMU reforms (banking union) to ensure proper financial intermediation; and (3) structural reforms in product and labor markets to improve productivity and support the reallocation of resources to tradable sectors.
Author: International Monetary Fund. Research Dept.
Publisher: International Monetary Fund
ISBN: 1498320791
Category : Business & Economics
Languages : en
Pages : 14
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Book Description
Articles in the June 2014 issue of the IMF Research Bulletin look at “The Rise and Fall of Current Account Deficits in the Euro Area Periphery and the Baltics” (Joong Shik Kang and Jay C. Shambaugh) and “The Two Sides of the Same Coin?: Rebalancing and Inclusive Growth in China” (Il Houng Lee, Murtaza Syed, and Xin Wang). The Q&A looks at “Seven Questions on the Monetary Transmission Mechanism in Low-Income Countries” (Andrew Berg, Luisa Charry, Rafael A. Portillo, and Jan Vleck). This issue of the Research Bulletin includes updated listings of IMF Working Papers, Staff Discussion Notes, and Recommended Readings from the IMF Bookstore. Readers can also find information on free access to a featured article from “IMF Economic Review.”
Author: Rajmund Mirdala
Publisher: Emerald Group Publishing
ISBN: 1787149544
Category : Business & Economics
Languages : en
Pages : 477
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Book Description
This book offers a critical perspective from which to observe evolution of the Euro Area and the European Union in these times of growing economic and political conflict.
Author: Rosaria Rita Canale
Publisher: Emerald Group Publishing
ISBN: 1787437930
Category : Business & Economics
Languages : en
Pages : 216
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Book Description
Fiscal and Monetary Policy in the Eurozone offers systematic analyses of the economic policy framework of the Eurozone and critiques current ideas about how to move forward, making it essential reading for postgraduate students of economics and of keen interest to researchers, policymakers, journalists, and financial strategists.
