Capital Markets and External Current Accounts: What to Expect From the Euro
August 1, 2000
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Summary
The paper compares the degree of capital market integration across euro-area countries with that across regions in Italy and provinces in Canada. Analyzing saving-investment correlations, and developing as well as fitting to the data a model of capital flows, reveal no compelling differences between the integration across countries before monetary union and that across the regions or provinces. The evidence does not suggest that EMU will prompt a major reallocation of net capital flows within the euro area that would entail sizable shifts in countries’ equilibrium current accounts.
Subject: Balance of payments, Capital market integration, Capital markets, Current account, Economic integration, Financial markets, Financial services, Production, Productivity, Real interest rates
Keywords: capital market, Capital market integration, Capital markets, capital mobility, Current account, current account response, EMU, Euro area, Global, investment, investment response, Productivity, productivity shock, Real interest rates, regions, saving, saving-investment correlation, WP
Pages:
38
Volume:
2000
DOI:
Issue:
154
Series:
Working Paper No. 2000/154
Stock No:
WPIEA1542000
ISBN:
9781451857221
ISSN:
1018-5941
