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

_IMF Working Papers, August 1, 2000_

## Source details

**Canonical URL:** [Capital Markets and External Current Accounts: What to Expect From the Euro](https://www.imf.org/en/publications/wp/issues/2016/12/30/capital-markets-and-external-current-accounts-what-to-expect-from-the-euro-3838)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/capital-markets-and-external-current-accounts-what-to-expect-from-the-euro-3838/index.md)
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## Bibliographic details
- Authors: Jörg Decressin, Piti Disyatat
- Published: August 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857221.001

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### Summary findings
- The paper compares the degree of capital market integration across euro-area countries with that across regions in Italy and provinces in Canada.
- Analyses of saving-investment correlations, and a model of capital flows developed and fitted to the data, 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.

### Methodology and analysis
- Empirical analysis of saving-investment correlations across:
  - euro-area countries (pre-monetary union)
  - regions in Italy
  - provinces in Canada
- Development and calibration/estimation of a model of capital flows fitted to the data to assess potential reallocations induced by monetary union.

### Conclusions and policy implications
- No compelling empirical or model-based evidence that monetary union (EMU) will cause major reallocation of net capital flows among euro-area countries.
- Accordingly, sizable shifts in countries’ equilibrium current accounts within the euro area are not indicated by the study’s findings.

### Subjects and keywords
- Subjects: 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

*Content summarized from the IMF Working Paper landing page: "Capital Markets and External Current Accounts: What to Expect From the Euro", Jörg Decressin and Piti Disyatat, August 1, 2000.*

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## Content in this bundle

- **Capital Markets and External Current Accounts: What to Expect from the Euro - WP/00/154**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/capital-markets-and-external-current-accounts-what-to-expect-from-the-euro-3838_