Euro Area Imbalances: Measuring the Contribution of Expenditure Growth and Expenditure Switching

Enno Schröder

No 1604, Working Papers from New School for Social Research, Department of Economics

Abstract: The article introduces a decomposition of trade flows that allows to measure expenditure-growth effects (changes in domestic and foreign final demand) and expenditure-switching effects (changes in the allocation of demand across domestic and foreign producers). The decomposition is applied to 11 euro members 1990-2014. Most countries, including Germany, recorded unfavorable expenditure-switching effects (demand shifted from domestic to foreign producers); expenditure switching was most unfavorable in Finland, France, and Italy. There is no correlation between unit labor cost growth and expenditure switching.

Keywords: Competitiveness; euro area; external adjustment; expenditure switching; macroeconomic imbalances (search for similar items in EconPapers)
JEL-codes: F4 F41 F45 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2016-08
New Economics Papers: this item is included in nep-eec and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.economicpolicyresearch.org/econ/2016/NSSR_WP_042016.pdf First version, 2016 (application/pdf)

Related works:
Working Paper: Eurozone Imbalances: Measuring the Contribution of Expenditure Switching and Expenditure Volumes 1990-2013 (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:1604

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