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Current Account Imbalances in the Southern Euro Area, Florence Jaumotte, Piyaporn Sodsriwiboon

The paper examines the causes, consequences, and potential cures of the large current account deficits in the Southern Euro Area (SEA). These were mostly driven by a decline in private saving rates. But it was the European Monetary Union and the Euro, which enabled these countries to maintain investment rates, and thus run larger current account deficits, by improving their access to the international pool of saving. The paper finds that the deficits in SEA in 2008 were larger than can be explained by fundamentals, though the situation varies substantially across countries. It also finds that although the global financial crisis has started to force some unwinding, the current account deficits are expected to remain high in the medium run, though again with substantial variation across countries. The paper argues these large external deficits pose risks to the economy and therefore matter, even in a currency union, and discusses some policy options to reduce them
Table Of Contents
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. What Explains the Rise in Current Account Deficits in Southern Euro Area Countries?; 1. Euro Area: Current Account Balance; 2. Southern Euro Area Countries: Current Account Balances 1970-2008; 3 Southern Euro Area: Savings and Investment; 4. Southern Euro Area: Private and Public Saving; 5. Southern Euro Area: Private and Public Investment; 6. Southern Euro Area: Financing of Current Account Balances; 7. Euro Area: Components of Current Account Balances; 1. Contributions to Current Account Deficits of SEA in 1994 and 1998
Literary Form
non fiction
"June 2010"
Physical Description
1 online resource (63 p.)
Specific Material Designation
Form Of Item

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