Macroeconomic Policy Making and Current Account Imbalances in the Euro Area
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Macroeconomic Policy Making and Current Account Imbalances in the Euro Area
Murai, Taiki | Schnabl, Gunther
Credit and Capital Markets – Kredit und Kapital, Vol. 54 (2021), Iss. 3 : pp. 347–373
1 Citations (CrossRef)
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Taiki Murai, Leipzig University, Grimmaische Straße 12, 04159 Leipzig, Germany.
Prof. Dr. Gunther Schnabl, Leipzig University, Grimmaische Straße 12, 04109 Leipzig, Germany.
Cited By
-
The Relationship Between the German Current Account and Financial Account: Evidence from the Toda-Yamamoto Causality Approach
Murai, Taiki
The Economists’ Voice, Vol. 21 (2024), Iss. 1 P.65
https://doi.org/10.1515/ev-2024-0023 [Citations: 0]
References
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Google Scholar -
Mayer, T./Schnabl, G. (2020): Post-COVID-19 EMU: Economic Distancing by Parallel Currencies. Intereconomics, Vol. 55(6), 387–391.
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Müller, S./Schnabl, G. (2019): The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union. Economists’ Voice, Vol. 16, 1.
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Schnabl, G. (2018): Fiscal Divergence and Current Account Imbalances in Europe. Economists’ Voice, Vol. 15, 1.
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Schnabl, G./Sonnenberg, N. (2020): (T)LTRO-Tracker. Mimeo.
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Schnabl, G./Zemanek, H. (2011): Inter-Temporal Savings, Current Account Imbalances and Asymmetric Shocks in a Heterogeneous European Monetary Union. Intereconomics, Vol. 46(3), 153–160.
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Sørensen, P. B. (2002): The German Business Tax Reform of 2000: A General Equilibrium Analysis. German Economic Review Vol. 3(4), 347–378.
Google Scholar -
Stark, J. (2001): Genesis of a Pact. In: The Stability and Growth Pact: The Architecture of Fiscal Policy in EMU (77–105). Brunila, A./Buti, M./Franco, D. (eds). London: Palgrave Macmillan.
Google Scholar -
Strauch, R./Paesani, P./Kremer, M. (2006): Public Debt and Long-Term Interest Rates: The Case of Germany, Italy and the USA. ECB Working Paper Series 656.
Google Scholar -
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Google Scholar -
Wendorff, K. (2001): The Discussion on a National Stability Pact in Germany. Fiscal Rules. Banca d’Italia Research Department Public Finance Workshop.
Google Scholar -
Belke, A./Dreger, C. (2014): Current Account Imbalances in the Euro Area: Does Catching Up Explain the Development. Review of International Economics, Vol 21(1), 6–17.
Google Scholar -
Belke, A./Gros, D./Schnabl, G. (2016): Das europäische Verfahren zur Vermeidung und Korrektur makroökonomischer Ungleichgewichte – Eine Forschungsagenda zu Reformansätzen. Wirtschaftsdienst, Vol. 96(8), 548–556.
Google Scholar -
Belke, A./Haskamp, U./Schnabl, G. (2018): Beyond Balassa and Samuelson: Real Convergence, Capital Flows, and Competitiveness in Greece. Empirica, Vol 44(2), 409–424.
Google Scholar -
Böhm von Bawerk, E. (1914): Unsere passive Handelsbilanz, In: Weiss, Franz (ed.): Gesammelte Schriften von Eugen von Böhm-Bawerk. Leipzig: Hölder-Pichler-Tempsky.
Google Scholar -
Bonatti, L,/Fracasso, A. (2013): The German Model and the European Crisis. Journal of Common Market Studies, Vol. 51(6), 1023–1039.
Google Scholar -
Branson, W. (1977): Exchange Rates in the Short Run: The Dollar Deutsche Mark Rate. European Economic Review, Vol. 10, 303–332.
Google Scholar -
Buiter, W./Michels, J./Rahbari, E. (2011): ELA: An Emperor Without Clothes? Citi Global Economics View.
Google Scholar -
Buti, M./Franco, D./Ongena, H. (1998): Fiscal Discipline and Flexibility in EMU: The Implementation of the Stability and Growth Pact. Oxford Review of Economic Policy, Vol. 14(3), 81–97.
Google Scholar -
Mundell, R. (1962): Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates. Canadian Journal of Economic and Political Science, Vol. 29, 475–485.
Google Scholar -
Nickell, S. (1997): Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rate. Journal of Economic Perspectives, Vol. (11)3, 55–74.
Google Scholar -
Obstfeld, M. (1999): EMU: Ready, or Not? NBER Working Papers 6682.
Google Scholar -
Organization for Economic Cooperation and Development (1998): OECD Economic Surveys, 1997–1998: Germany.
Google Scholar -
Pierluigi, B./Sondermann, D. (2018): Macroeconomic Imbalances in the Euro Area: Where Do We Stand? ECB Occasional Paper 211.
Google Scholar -
Pisani-Feri, J./Merler, S. (2012): The Simple Macroeconomics of North and South in EMU. Bruegel Working Paper 2012/12.
Google Scholar -
Radulescu, D./Stimmelmayr, M. (2012): The Impact of the 2008 German Corporate Tax Reform: A Dynamic CGE Analysis. Economic Modelling, Vol. 27(1), 454–467.
Google Scholar -
Rinne, U./Zimmermann, K. (2013): Is Germany the North Star of Labor Market Policy? IMF Economic Review, Vol. 61(4), 702–729.
Google Scholar -
Rodden, J. (2003): Soft Budget Constraints and German Federalism. In Fiscal Decentralization and the Challenge of Hard Budget Constraints (161–186). Ed. Rodden, J./Eskeland, G./Litvack, J. Cambridge, MA: MIT Press.
Google Scholar -
Ruppert, K./Stähler, N. (2020): Household Savings, Capital Investments and Public Policies: What Drives the German Current Account? Deutsche Bundesbank Discussion Paper 41/2020.
Google Scholar -
Schnabl, G. (2018): Fiscal Divergence and Current Account Imbalances in Europe. Economists’ Voice, Vol. 15, 1.
Google Scholar -
Schnabl, G./Sonnenberg, N. (2020): (T)LTRO-Tracker. Mimeo.
Google Scholar -
Schnabl, G./Zemanek, H. (2011): Inter-Temporal Savings, Current Account Imbalances and Asymmetric Shocks in a Heterogeneous European Monetary Union. Intereconomics, Vol. 46(3), 153–160.
Google Scholar -
Schröder, G. (2013): Reforms and Agenda 2010. Mimeo.
Google Scholar -
Sinn, H.-W. (2020): The Economics of Target Balances. From Lehman to Corona. Basingstoke: Palgrave Macmillan.
Google Scholar -
Sinn, H.-W./Wollmershäuser, T. (2012): Target Loans, Current Account Balances and Capital Flows: the ECB’s Rescure Facility. International Tax and Public Finance, Vol. 19(4), 468–508.
Google Scholar -
Sørensen, P. B. (2002): The German Business Tax Reform of 2000: A General Equilibrium Analysis. German Economic Review Vol. 3(4), 347–378.
Google Scholar -
Stark, J. (2001): Genesis of a Pact. In: The Stability and Growth Pact: The Architecture of Fiscal Policy in EMU (77–105). Brunila, A./Buti, M./Franco, D. (eds). London: Palgrave Macmillan.
Google Scholar -
Strauch, R./Paesani, P./Kremer, M. (2006): Public Debt and Long-Term Interest Rates: The Case of Germany, Italy and the USA. ECB Working Paper Series 656.
Google Scholar -
Unger, R. (2017): Asymmetric Credit Growth and Current Account Imbalances in the Euro Area. Journal of International Money and Finance, Vol. 73, 435–451.
Google Scholar -
Wendorff, K. (2001): The Discussion on a National Stability Pact in Germany. Fiscal Rules. Banca d’Italia Research Department Public Finance Workshop.
Google Scholar -
Cechetti, S./McCauley, R./McGuire, P. (2012): Interpreting TARGET2 Balances. BIS Working Papers 393.
Google Scholar -
Cordon, M./Neary, P. (1982): Booming Sector and De-industrialisation in a Small Open Economy. The Economic Journal, Vol. 92, 825–848.
Google Scholar -
Deutsche Bundesbank (2005): Deficit-Limiting Budgetary Rules and A National Stability Pact in Germany. Monthly Report, Vol. 54(7), 23–37.
Google Scholar -
Deutsche Bundesbank (2020): Die deutsche Zahlungsbilanz für das Jahr 2019. Deutsche Bundesbank Monatsbericht März 2020, 17–40.
Google Scholar -
Eichhorst, W./Marx, P. (2011): Reforming German Labour Market Institutions: A Dual Path to Flexibility. Journal of European Social Policy, Vol. 21(1), 73–87.
Google Scholar -
European Central Bank (2011): TARGET2 Balances of National Central Banks in the Euro Area. Monthly Bulletin, Oct 2011, 35–43.
Google Scholar -
European Central Bank (2020): ECB Announces Package of Temporary Collateral Easing Measures, ECB: Frankfurt.
Google Scholar -
European Commission (2021): NextGenerationEU: Commission Gets Ready to Raise up to €800 billion to Fund the Recovery. Brussels: European Commission.
Google Scholar -
Fabiani, J./Fidora, M./Setzer, R./Westphal, A./Zorell, N. (2021): Sudden Stops and Assets Purchase Programmes in the Euro Area. Mimeo.
Google Scholar -
Farhi, E./Gopinath, G./Itskhoki, O. (2021): Fiscal Devaluations. The Review of Economic Studies, Vol. 81(2), 725–760.
Google Scholar -
Fialová, K./Schneider, O. (2009): Labor Market Institutions and Their Effect on Labor Market Performance in the New EU Member Countries. Eastern European Economics, Vol. 47(3), 57–83.
Google Scholar -
Fleming, M. (1962): Domestic Financial Policies under Fixed and Floating Exchange Rates. IMF Staff Paper, Vol. 9, 369–379.
Google Scholar -
Gadatsch, N./Stähler, N./Weigert, B. (2016): German Labor Market and Fiscal Reforms 1999–2008: Can They Be Blamed for Intra-Euro Area Imbalances? Journal of Macroeconomics, Vol. 50, 307–324.
Google Scholar -
Garrett, G. (1993): The Politics of Maastricht. Economics and Politics, Vol. 5(2), 105–123.
Google Scholar -
Gros, D./Alcidi, C. (2014): Country Adjustment to a ‘Sudden Stop’: Does the Euro Make a Difference? International Economics and Economic Policy, Vol. 12, 5–20.
Google Scholar -
Gros, D./Thygesen, N. (1994): European Monetary Integration. From the European Monetary System to Economic and Monetary Union. Longman Group, London.
Google Scholar -
Hayek, F. A. (1931): Prices and Production. Reprint New York: Augustus M. Kelley Publishers.
Google Scholar -
Horn, G./Watt, A. (2017): Wages and Nominal and Real Unit Labour Cost Differential in EMU. European Economy Discussion Papers 2015.
Google Scholar -
International Monetary Fund (2014): Germany: Selected Issues 217.
Google Scholar -
Ioannou, D./Stracca, L. (2014): Have the Euro Area and EU Governance Worked? Just the Facts. European Journal of Political Economy, Vol. 34, 1–17.
Google Scholar -
King, M. (2002): Strong Families or Patriarchal Economies? ‘Familial’ Labor Markets and Welfare States in Comparative Perspective. LIS Working Paper Series 301.
Google Scholar -
Kogan, I. (2006): Labor Markets and Economic Incorporation among Recent Immigrants in Europe. Social Forces, Vol. 85(2), 697–721.
Google Scholar -
Lagarde, C. (2020): Our Response to the Coronavirus Emergency. ECB: Frankfurt.
Google Scholar -
Langenus, G. (2005): The Stability and Growth Pact: An Eventful History, National Bank of Belgium Economic Review, Vol. 2, 65–81.
Google Scholar -
Litsios, I./Pilbeam, K. (2017): An Empirical Analysis of the Nexus Between Investment, Fiscal Balances and Current Account Balances in Greece, Portugal and Spain. Economic Modelling, Vol. 63, 143–152.
Google Scholar -
Mayer, T./Schnabl, G. (2020): Post-COVID-19 EMU: Economic Distancing by Parallel Currencies. Intereconomics, Vol. 55(6), 387–391.
Google Scholar -
Müller, S./Schnabl, G. (2019): The Brexit as a Forerunner: Monetary Policy, Economic Order and Divergence Forces in the European Union. Economists’ Voice, Vol. 16, 1.
Google Scholar -
Abad, J./Löffler, A./Schnabl, G. (2013): Fiscal Divergence and TARGET2 Imbalances in the EMU. Intereconomics, Vol. 48(1), 51–58.
Google Scholar -
Alexander, S. (1952): Effects of a Devaluation on a Trade Balance. IMF Staff Papers, Vol. 2(2), 263–278.
Google Scholar
Abstract
The paper analyses the role of fiscal and monetary policy for the development of the current account imbalances in the euro area, including the most recent developments during the coronavirus crisis. Several financial transmission channels such as international bank lending, changes in TARGET2 balances, international rescue credit and government bond purchases of euro area central banks are identified. It is found that differing fiscal policy stances which have interacted differently with the ECB’s monetary policy have been at roots of first diverging and then converging current account positions in the euro area. Since the European financial and debt crisis, public financing mechanisms and the unconventional monetary of the ECB have contributed to the persistence of intra-euro area current account imbalances.