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Savings and investment behaviour in the euro area

Diego Rodriguez-Palenzuela, Stephane Dees, Malin Andersson, Martin Bijsterbosch, Katrin Forster, Nico Zorell, Richard Audoly, Christian Buelens, Guillaume Compeyron, Annalisa Ferrando, Marie-Helene Felt, Ivan Jaccard, Richard Morris, Selin Özyurt, Sören Radde, Desislava Rusinova, Lorena Saiz, Cristophe Piette, Christophe Van Nieuwenhuyze, Arne Nagengast, Taavi Raudsaar, Liina Malk, Mary Everett (), Christos Catiforis, Stelios Panagiotou (), Alberto Urtasun, Matthias Burker, Vincent Vicard, Filippo Scoccianti, Maria Papageorghiou, Osvalds Bluzma, Gabriele Di Filippo, Alessandro Porpiglia, William Gatt, Bahar Öztürk, Anneli Perridon, Nicolas Albacete, Sónia Costa, Nuno Silva, Uros Herman (), Robert Zorko, Anna Strachotova and Adam Gulan

No 167, Occasional Paper Series from European Central Bank

Abstract: Although monetary union created the conditions for improving economic and financial integration in the euro area, in the context of the financial and sovereign crises, it has also been accompanied by the emergence of severe imbalances in savings and investment, credit and housing booms in some countries and the allocation of resources towards less productive sectors. The global financial crisis and the euro area sovereign debt crisis then led to major and abrupt adjustments as the risks posed by the large imbalances materialised. Although the institutional shortcomings in the EU that permitted the emergence of imbalances have been largely addressed since 2008, the adjustment process is not yet complete. From a macroeconomic perspective, the imbalances in the external accounts have led to the accumulation of high levels of external liabilities that need to be reduced, which, in turn, is weakening investment and therefore weighing on growth prospects and growth potential. From a macroprudential perspective, the lingering imbalances have added to systemic risk and rendered the euro area more vulnerable to risks. This Occasional Paper analyses the dynamic patterns in macroeconomic imbalances primarily from the former perspective, addressing in particular the connections between macroeconomic and sectoral adjustments of imbalances and the challenges for economic growth and performance over a longer horizon. JEL Classification: E21, E22, F32, F41

Keywords: consumption; current account; investment; rebalancing; savings (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-mac
Note: 54288
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Handle: RePEc:ecb:ecbops:2016167