EconPapers    
Economics at your fingertips  
 

Asymmetric credit growth and current account imbalances in the euro area

Robert Unger ()

Journal of International Money and Finance, 2017, vol. 73, issue PB, 435-451

Abstract: The euro-area crisis is often linked to the emergence of current account imbalances. As most of the deficit countries experienced pronounced credit booms at the same time that these imbalances were building up, this paper investigates the link between domestic credit developments and the current account balance. Using a panel error correction specification, the estimation results show that flows of bank loans to the non-financial private sector are a significant determinant of the current account and that they – together with changes in competitiveness – constituted the most important factor driving the build-up of current account imbalances in the deficit countries. Accordingly, impeding an increase in private sector indebtedness seems to be a promising way to dampen the formation of unsustainable current account imbalances.

Keywords: Banks; Credit growth; Current account imbalances; Euro area (search for similar items in EconPapers)
JEL-codes: E50 F32 F45 G21 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560617300372
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Asymmetric Credit Growth and Current Account Imbalances in the Euro Area (2016) Downloads
Working Paper: Asymmetric credit growth and current account imbalances in the euro area (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:73:y:2017:i:pb:p:435-451

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-12-13
Handle: RePEc:eee:jimfin:v:73:y:2017:i:pb:p:435-451