Current Account Imbalances in Europe

Philip Lane and Barbara Pels

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: The European crisis is partly attributable to the sharp increase in external imbal- ances across Europe during the pre-crisis period. We examine current account imbal- ances in Europe over 1995-2007, together with the underlying saving and investment rates (and their subcomponents). We O?nd that the discrete expansion in current ac- count 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 (search for similar items in EconPapers)
JEL-codes: E63 F41 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2012-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67)

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Working Paper: Current Account Imbalances in Europe (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:iis:dispap:iiisdp397

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