Current account “Core-periphery dualism” in the EMU

Tatiana Cesaroni and Roberta de Santis ()

LEQS – LSE 'Europe in Question' Discussion Paper Series from European Institute, LSE

Abstract: Current account (CA) dispersion within European Union (EU) member states has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a long run rebalancing as neoclassical theory predicts. To shed light on the issue this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the OECD and EU groups, financial integration contributed to explain CA deterioration in the peripheral countries especially in the post-EMU period. The business cycle seems to have played a growing role over time, whereas the role of competiveness seems to have diminished with respect to the past.

Keywords: current account imbalances; financial integration; EMU; core-periphery countries; panel econometric models (search for similar items in EconPapers)
JEL-codes: F36 F43 (search for similar items in EconPapers)
Date: 2015-03
New Economics Papers: this item is included in nep-eec, nep-opm and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Current Account ‘Core–Periphery Dualism’ in the EMU (2016)
Working Paper: Current account "core-periphery dualism" in the EMU (2014)
Working Paper: CURRENT ACCOUNT “CORE-PERIPHERY DUALISM” IN THE EMU (2014)
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