Rebalancing: Evidence from Current Account Adjustment in Europe

Author/Editor:

Ruben V Atoyan ; Jonathan F Manning ; Jesmin Rahman

Publication Date:

March 22, 2013

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

After the 2003-2007 economic boom, European countries with large pre-crisis current account imbalances are undergoing adjustments. Countries are adjusting at different paces and ways reflecting the source and magnitude of imbalances, availability of financing, competitiveness of the tradable sector and external environment. While emerging European countries with large pre-crisis imbalances and a fixed exchange rate regime have seen sharp current account adjustments and a rebound in growth, adjustment in the euro zone periphery countries, which are also carrying a legacy of pre-crisis CA imbalances, has been gradual with difficulties bringing back growth. This paper is an empirical investigation of current account adjustment in Europe with a focus on these two groups, looking at contributions from cyclical and other factors, and seeking to draw policy conclusions.

Series:

Working Paper No. 2013/074

Subject:

Balance of payments Capital inflows Credit Current account Exchange rate arrangements Financial crises Foreign exchange Money

English

Publication Date:

March 22, 2013

ISBN/ISSN:

9781484384046/1018-5941

Stock No:

WPIEA2013074

Pages:

29

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