Current Account Balances’ Divergence in the Euro Area: An Appraisal of the Underlying Forces
Emmanuelle Faure,
Carl Grekou,
Valérie Mignon
Abstract:This paper revisits the crucial issue of current account imbalances and focuses on the determinants of their gaps between eurozone Member States. We conduct robust estimations of the current account balances for a panel of ten founding euro area economies and construct a measure that allows us to diagnose why some countries have started to diverge from the eurozone mean in the last two decades. Our findings show evidence of remaining differences in countries’ economic development, meaning that real macroeconom… Show more
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