Testing for external sustainability under a monetary integration process. Does the Lawson doctrine apply to Europe?

Camarero, Mariam; Carrion‐i‐Silvestre, Josep Lluís; Tamarit, Cecilio

doi:10.1016/j.econmod.2014.06.010

Cited by 13 publications

(14 citation statements)

References 39 publications

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“…Our results are consistent with those of Chen () for the Czech Republic and Greece, Camarero et al. () for Italy and Belgium (but not Greece), Bajo‐Rubio et al. () for Italy, and Holmes () for Belgium (but not Italy).…”

Section: Empirical Analysissupporting

confidence: 93%

“…In Chen (), various linear and non‐linear tests in CA/GDP series pointed to sustainability in a sample of 10 OECD countries. Camarero, Carrion‐i‐Silvestre, and Tamarit () tested for the presence of structural breaks in the net foreign assets (NFA) series in 11 EA countries. The null of stationarity was not rejected for the panel and for five countries only over the period 1972–2011.…”

Section: Literaturementioning

confidence: 99%

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Assessing the sustainability of external imbalances in the European Union

et al. 2018

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We assess the sustainability of the current account (CA) balance, net international investment position (NIIP) and net external debt (NED) in a sample of 22 EU countries using two complementary approaches. First, we employ time‐series stationarity tests of current account balance‐to‐GDP ratios as well as cointegration tests of exports and imports of goods and services. Second, we assess the level of trade balance that stabilises the NIIP and the NED. We find that there is sustainability of the CA balance in eight countries, NIIP in five countries and NED in 10 countries, whereas there is evidence of a lack of sustainability in five debtor nations and three creditor nations. Both approaches are consistent with each other given the relationship between flows and stocks, the existence of structural breaks, and valuation effects via exchange rate and interest rate changes.

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Section: Empirical Analysissupporting

confidence: 93%

Section: Literaturementioning

confidence: 99%

Assessing the sustainability of external imbalances in the European Union

et al. 2018

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“…Countries belonging to a monetary union may change their external adjustment process once they adopt the common currency. This may also have external solvency implications as it is highlighted by Camarero, Carrion‐i‐Silvestre, and Tamarit ().…”

Section: Resultsmentioning

confidence: 95%

Exchange rate regime and external adjustment: An empirical investigation for the US

Fuertes

2018

World Economy

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This paper analyses the relationship between the US net external position and the exchange rate regime. I find a structural break in the US net external position at the end of the Bretton Woods system of fixed exchange rates that changed both the mean and variance of the series. On average, the US changed from a creditor to a debtor position and the variance of the external position increased during the floating period. This increase is to a large extent due to the valuation component of external adjustment that accounts for 54% of the variance of the US external position during the floating period but only 29% during the fixed exchange rate period. Further analysis shows that the exchange rate regime mainly affects the valuation channel of external adjustment. There is also evidence of another structural break in the US external position around the time of the introduction of the euro. Finally, I document asset pricing implications from the relationship between the exchange rate regime and the external adjustment process, as external imbalances predict the foreign exchange once the exchange rate regime is taken into account.

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“…Housing investment can capture important aspects. The results of Camarero et al () suggest that the net foreign asset to GDP ratio is stationary for almost all member states, if structural breaks are acknowledged. Abrupt adjustments either led by market forces or proactive policies may be needed to offset external disequilibria.…”

Section: Determinants Of Current Account Positionsmentioning

confidence: 98%

Current Account Imbalances in the Euro Area: Does Catching up Explain the Development?

Belke

Dreger

2013

Rev International Economics

104

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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.

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Testing for external sustainability under a monetary integration process. Does the Lawson doctrine apply to Europe?

Cited by 13 publications

References 39 publications

Assessing the sustainability of external imbalances in the European Union

Assessing the sustainability of external imbalances in the European Union

Exchange rate regime and external adjustment: An empirical investigation for the US

Current Account Imbalances in the Euro Area: Does Catching up Explain the Development?

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