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

Holger Zemanek, Ansgar Belke () and Gunther Schnabl ()

No 895, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

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: Structural reforms; competitiveness; current account imbalances; euro area; European Monetary Union; dynamic panel estimation; interaction term (search for similar items in EconPapers)
JEL-codes: E24 F15 F16 F32 F33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-opm
Date: 2009
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Working Paper: Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness (2009) Downloads
Working Paper: Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness (2009) Downloads
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