Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness

Holger Zemanek, Ansgar Belke and Gunther Schnabl

No 7, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: Low international competitiveness of a set of euro area countries, which have become evident by large current account deficits and rising risk premiums on government bonds, is one of the most challenging economic policy issues for Europe. We analyse the role of private restructuring and public structural reforms for the urgently needed readjustment of intra-euro area imbalances. A panel regression reveals a significant impact of private restructuring and public structural reforms on intra-euro area competitiveness. This implies that private restructuring and public reforms are rather than public transfers the best way to preserve long-term economic stability in Europe.

Keywords: interaction term; dynamic panel estimation; European Monetary Union; euro area; current account imbalances; competitiveness; structural reforms (search for similar items in EconPapers)
JEL-codes: E24 F15 F16 F32 F33 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2009-04
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Published - published in: International Economics and Economic Policy, 2010, 7, 83–127

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Working Paper: Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness (2009)
Working Paper: Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness (2009)
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