Current account imbalances and systemic risk within a monetary union

Angelini, Elisabetta Croci; Farina, Francesco

doi:10.1016/j.jebo.2012.05.009

Cited by 16 publications

(15 citation statements)

References 17 publications

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“…A number of studies testify that the CAI rebalancing was driven by this asymmetric adjustment mechanism (e.g. Croci Angelini and Farina 2012, Storm and Naastepad 2015, Esposito and Messori 2017. A simple indicator that captures these results is provided by the nominal GDP of the deficit region relative to the one of the surplus region presented in Figure 10.…”

Section: Policy Implicationsmentioning

confidence: 99%

Current Account Imbalances and the Euro Area. Alternative Views

Mazzocchi

Tamborini

2019

SSRN Journal

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The crucial role of current account imbalances (CAI) is widely acknowledged in the consensus narratives of the European crisis that followed the Great Recession. On the basis of this interpretation, new EU initiatives arose, in particular the so-called "Six Pack" in 2011 and the establishment of the European Semester procedure to improve policy coordination in the EU beyond fiscal matters. This package includes the Macroeconomic Imbalances Procedure (MIP), which broadens the EU economic governance framework to include the surveillance of unsustainable macroeconomic trends. Although the widening of the CAI in the Euro Area is a matter of fact, and the consensus narrative contains elements of truth, alternative views have been put forward on three main issues: i) their relevance, ii) their causes and connection with the crisis, and iii) their policy implications. The aim of this paper is to examine these controversial points about the causes, meaning and consequences of CAI, and discuss the alternative policy prescriptions that emerge.

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Section: Policy Implicationsmentioning

confidence: 99%

Current Account Imbalances and the Euro Area. Alternative Views

Mazzocchi

Tamborini

2019

SSRN Journal

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“…Economics the economic, fi nancial and social stability of the EU and individual EU member states (see for example studies of Babecký et al (2012), Csortos andSzalaj (2014), Domonkos et al (2017) and Li (2018)). These indicators of macroeconomic imbalances are also subject of criticism (Coolington, 2012;2013); on the other hand in the EU there exists political consensus for its evaluation and practical evidence.…”

Section: Stanislav Kološta Pavol Kráľ Filip Flaška 1 XXII 2019mentioning

confidence: 99%

“…The development of various indicators at micro and macro levels in times of last crisis in various countries was investigated by several authors (Campos-Soria, Inchausti-Sintes, & Eugenio-Martin, 2015;Gugler, Weichselbaumer, & Zulehner, 2015;Zhao, Jiang, & Li, 2014;Tatulescu & Patruti, 2014;Mazurek & Mielcová, 2017;Klepáč & Hampel, 2018). In recent years, partial examination of indicators of macroeconomic imbalances in the EU or OECD countries has focused, for example, on the (im) balance of the current account balance (Gosse & Serranita, 2014;Angelini & Farina, 2012;Zozri, Chudík, & Dieppe, 2012), employment (Querimi & Sergi, 2017;Markovitz, Boer, & Van Dick, 2014), external imbalances (Fogli & Perri, 2015;Mauro & Pappada, 2014), labor productivity (Auzina-Emsina, 2014), the trade imbalance (Begler & Nitsch, 2014), setting-up wages and prices (Angelini, Dieppe, & Pierluigi, 2015), or the satisfaction of citizens in relation to macroeconomic indicators (Stracca, 2014).…”

Section: Introductionmentioning

confidence: 99%

Alternative measures of macroeconomic imbalances in the EU – design and verification

Kološta¹,

Kráľ²,

Flaška³

2018

E+M

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“…Moreover, the relevance of a core–periphery divide has resurfaced during the crisis, implying the need for focusing attention on macroeconomic structural imbalances and the central role of foreign debt. The view of a balance of payment crisis, with the associated risks of large external deficits even in a currency union, has been highlighted in several works (Barnes, ; Berger and Nitsch, ; Higgins and Klitgaard, ; Jaumotte and Sodsriwiboon, ; Waysand et al., ; Gros, ; Gros and Alcidi, ; Alessandrini et al., ; Croci Angelini and Farina, ; De Grauwe and Ji, ; Schmitz and von Hagen, )…”

Section: Literature Review On Debt Crisis In Europementioning

confidence: 99%

External Public Debt, Trade Linkages and Contagion During the Eurozone Crisis

Cutrini

Galeazzi

2016

World Economy

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Against the backdrop of the contagion literature, the paper analyses the impact of financial and trade linkages on sovereign bond spreads in the Eurozone crisis. Using quarterly data for a sample of EMU countries during the period 2000–13, we estimate fixed‐effect panel models with Driscoll and Kraay standard errors that are robust to general forms of spatial and temporal dependence. Our main results can be summarised as follows: first, we suggest that the ‘sudden stop’ of capital inflow towards the peripheral sovereign debt triggered a re‐segmentation of financial markets and economic systems along national borders, with negative implications for risk‐sharing and the efficient allocation of capital. The ‘home bias’ effect – that is the increase in the share of sovereign debt held by domestic banks – worsened the country‐specific risk because the twin crisis (sovereign and banking) began to be conceived as more closely intertwined within countries than before. Second, the structure of international trade helps to account for the geographic scope of contagion, even after controlling for macroeconomic and fiscal vulnerabilities. Finally, the ‘substitution effect’ of public debt securities of stand‐alone emerging countries has affected more the sovereign spreads in the core than in the periphery.

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Current account imbalances and systemic risk within a monetary union

Cited by 16 publications

References 17 publications

Current Account Imbalances and the Euro Area. Alternative Views

Current Account Imbalances and the Euro Area. Alternative Views

Alternative measures of macroeconomic imbalances in the EU – design and verification

External Public Debt, Trade Linkages and Contagion During the Eurozone Crisis

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