IMF Working Papers

Capital Markets and External Current Accounts : What to Expect From the Euro

Author/Editor:

Jörg Decressin ; Piti Disyatat

Publication Date:

August 1, 2000

Electronic Access:

Free Full Text. Use the free Adobe Acrobat Reader to view this PDF file

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.

Series:

Working Paper No. 00/154

Subject:

Capital markets Current account Euro Investment Savings