Current Account Imbalances in the Southern Euro Area [electronic resource] Jaumotte, Florence.

Jaumotte, Florence.
Washington, D.C. : International Monetary Fund, 2010.
IMF eLibrary
IMF Working Papers; Working Paper No. 10/139.
IMF Working Papers; Working Paper No. 10/139
Government document
1 online resource (49 p.)
Local subjects:
Balance of payment. (search)
Capital account. (search)
Capital account openness. (search)
Central banks. (search)
Current account. (search)
Current account adjustment. (search)
Current account balance. (search)
Current account balances. (search)
Current account deficit. (search)
Current account deficits. (search)
Current account dynamics. (search)
Current account imbalances. (search)
Current account surpluses. (search)
Current accounts. (search)
Debt sustainability. (search)
Domestic currency. (search)
Domestic saving. (search)
External debt. (search)
External liabilities. (search)
Foreign loans. (search)
Global Financial Crisis -- 2008-2009. (search)
Government deficits. (search)
Investment income. (search)
Private credit. (search)
Private savings. (search)
Public debt. (search)
Cyprus. (search)
European Union. (search)
Greece. (search)
Italy. (search)
Malta. (search)
Portugal. (search)
Slovenia. (search)
Spain. (search)
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.
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Jaumotte, Florence.
Sodsriwiboon, Piyaporn.
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