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Current Account Imbalances and the Crisis in the Euro Area

Isidro Frias, María Rosario Díaz Vázquez and Ai Casal
Authors registered in the RePEc Author Service: M. Rosario Diaz-Vazquez ()

Revista Galega de Economía, 2012, vol. 21, issue ex

Abstract: In this paper we study the factors that explain the sustainability of current account imbalances in the Euro area and its relation with the economic crisis, addressing specifically the case of Spain. Estimation of foreign trade equations for Spain shows that a sustainable situation for trade imbalances could have been reached in two ways. Firstly, through an agreed actuation implemented in order to rise aggregated demand in central states over that in countries in the periphery. Secondly, controlling the pro cyclical movements promoted by monetary and credit variables.

Keywords: Current account imbalances; Imbalances in the Euro Area; European Monetary Union; Foreign trade in Spain; VEC models; Foreign trade equations estimation (search for similar items in EconPapers)
Date: 2012
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