Current Account Imbalances in Europe
Philip Lane and
No 8958, CEPR Discussion Papers from C.E.P.R. Discussion Papers
The European crisis is partly attributable to the sharp increase in external imbalances across Europe during the pre-crisis period. We examine current account imbalances in Europe over 1995-2007, together with the underlying saving and investment rates (and their subcomponents). We find that the discrete expansion in current account imbalances during the 2002-2007 period can be attributed to a strengthening in the link between growth forecasts and current account balances. A striking pattern was that greater optimism about future growth was associated with lower savings and higher construction investment, rather than investment in productive capital.
Keywords: current account; EMU; Europe (search for similar items in EconPapers)
JEL-codes: E63 F41 (search for similar items in EconPapers)
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Working Paper: Current Account Imbalances in Europe (2012)
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