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Wage dynamics and current account rebalancing in the euro area

Antoine Berthou () and Guillaume Gaulier ()

Quarterly selection of articles - Bulletin de la Banque de France, 2013, issue 30, 71-91

Abstract: Using the NiGEM model, the authors show that a wage moderation in the “deficit” countries of the euro area –i.e. lowering the annual growth rate of wages by one percentage point over a five year horizon– would improve their current account balances by 0.2 to 0.3 percentage points of GDP. The impact would be greater if the wage moderation in the “deficit” euro area countries were accompanied by a simultaneous and symmetrical wage increase in the area’s surplus countries.

Keywords: current account balance; symmetrical adjustment; price adjustment; wages; domestic demand; capital flows; euro area; rebalancing. (search for similar items in EconPapers)
JEL-codes: F17 F32 F41 F47 (search for similar items in EconPapers)
Date: 2013
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Journal Article: Dynamiques de salaires et rééquilibrage des comptes courants dans la zone euro (2013) Downloads
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