On the origin of European imbalances in the context of European integration

Carrasco, Carlos A.; Peinado, Patricia

doi:10.2298/pan1502177c

Cited by 10 publications

(5 citation statements)

References 23 publications

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“…It is worthwhile mentioning that the build-up of imbalances in the pre-crisis period was relatively symmetric in the euro area whereas the rebalancing is not (Stefan Ederer and Peter Reschenhofer 2013;Carlos Carrasco and Patricia Peinado 2014). The reduction of current account deficits was combined with a substantial reduction of output and employment.…”

Section: Did Internal Devaluation Work?mentioning

confidence: 99%

Current account imbalances in the EMU: An assessment of official policy responses

Dodig

Herr

2015

Panoeconomicus

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To handle the sovereign debt crisis in general and macroeconomic imbalances in particular the leading EU institutions and the Troika (European Central Bank, European Commission and International Monetary Fund) adopted two broad approaches: The short-term approach is based on enhancing the Stability and Growth Pact and to impose fiscal austerity on crisis countries. The medium- to long-term strategy consists of internal devaluation via reducing wage costs. Both approaches were combined with structural adjustment programs in the spirit of the Washington Consensus. The Troika?s policy implies an asymmetric adjustment process burdening only crisis countries. It led to the shrinking of demand and output in crisis countries comparable to the Great Depression and brought the European Monetary Union to the edge of deflation. These polices must be judged as mislead increasing the risk of Japanese disease with more than one lost decade.

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Section: Did Internal Devaluation Work?mentioning

confidence: 99%

Current account imbalances in the EMU: An assessment of official policy responses

Dodig

Herr

2015

Panoeconomicus

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“…Finally, Holly Snaith (2014) and Joshua Aizenman (2016), following the approach of the optimum currency areas, argue that the imposition of a "one size fits all" monetary policy is likely to increase the disparities between euro nations and regions, an argument also shared by António Mendonça (2014) and Carlos A. Carrasco and Patricia Peinado (2015).…”

mentioning

confidence: 99%

Economic crisis and convergence in the Eurozone countries

et al. 2017

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Although a key condition for the creation of a monetary union is the existence of similar structural characteristics that reduce the existence and incidence of asymmetric shocks, in the case of the Eurozone, most, if not all, studies have emphasized the existence of sizeable divergences both in the macroeconomic performances and in the structural elements of the Eurozone countries. The objective of the paper is to analyse whether the economic and financial crisis that is affecting the Eurozone since the year 2008 has had any impact of the coherence of the Eurozone, that is, whether after 2008 the differences in the macroeconomic performance of the euro counties are declining (convergence) or increasing (divergence).

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“…It turns out that divergent fiscal policy paths have been closely associated with the deepening of external imbalances in some member states (Gunther Schnabl and Timo Wollmershäuser 2013; Carlos A. Carrasco and Patricia Peinado 2015).…”

Section: Discussionmentioning

confidence: 99%

The effect of fiscal deficits on the external imbalances in the European Union

Josifidis

Dragutinović-Mitrović

Bodor

2021

Panoeconomicus

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This paper analyzes the effect of the fiscal deficit on the current account deficit in the European Union during the period 1995-2018. The purpose is to examine to what extent an increase in government spending affects the deterioration of terms of trade and contributes to increasing external imbalances. Econometric methods for heterogeneous panel data models are used to analyse the existence of a long-run relationship between the fiscal deficit and the current account. The empirical findings indicate that the twin deficits hypothesis is not confirmed for the whole European Union, but only for a certain number of member states, where a long-run relationship still exists, confirming the impact of the fiscal deficit on the current account.

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On the origin of European imbalances in the context of European integration

Cited by 10 publications

References 23 publications

Current account imbalances in the EMU: An assessment of official policy responses

Current account imbalances in the EMU: An assessment of official policy responses

Economic crisis and convergence in the Eurozone countries

The effect of fiscal deficits on the external imbalances in the European Union

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