Download or read book The Euro s Effecton Trade Imbalances written by Mr.Helge Berger and published by International Monetary Fund. This book was released on 2010-10-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.

Download or read book Analysis on the trade imbalances within the European Union written by Valerio Zoccante and published by GRIN Verlag. This book was released on 2015-07-01 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2015 in the subject Economics - Macro-economics, general, grade: B, University of Southern Denmark, language: English, abstract: The aim of this work is to assess the factors that have been affecting the imbalances of trade within countries of the European Union. The analysis takes into consideration the elements that could affect the balance of trade, thus saving or investment. The variables that are included in the panel data framework are related to productivity, inflation, consumption, wage level, capital movements, demography of the population, economic growth, public and private debt levels. A panel data, that leaves out countries from East Europe, is created, and takes values that go from 2002 to 2013. The panel data shows that technology gaps and capital movements have been the main factors that affected the balance of trade of the peripheral countries. Peripheral countries did not invest enough in projects that could enhance the productivity, leading to a competitiveness loss that was not followed by a correction of the wage levels. Moreover, capital movements have been financing consumption surges in Greece and Portugal, whereas in Spain and Ireland those capitals have fueled credit booms and house bubbles. Therefore, those countries have been experiencing a worsening of their balance of trade, and investors have not been willed anymore to finance additional debt. Indeed, Members of the euroarea could not guarantee that the central bank could play the role of lender of last resort. Knowing that, in a currency union, the external position of a country represents its capacity of producing goods and services that could serve the debt in a troubled time, in the eyes of the investors the balances of trade of the peripheral eurozone countries became relevant during the European sovereign debt crisis. In the European framework, in order to decrease the imbalances of trade within the Members, fiscal transfers to peripheral countries could be beneficial for decreasing the cost that peripheral countries need to undergo during the adjustment period, whereas reforms that aim to enhance productivity in the peripheral countries and increase the mobility and the flexibility of the product and labor markets could be highly helpful. The following work highlights all those elements in a empirical framework, relating, however, the results to the literature that has been developed around the European case and the optimum currency area.

Download or read book Rising Powers and Economic Crisis in the Euro Area written by Ferdi De Ville and published by Springer. This book was released on 2016-06-15 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this book, Ferdi De Ville and Mattias Vermeiren examine the linkages between the economic crisis in the euro area and the rise of Brazil, India and China (BICs) in the global monetary and trading system. Drawing on the insights of the comparative capitalism literature, the authors show that the latter development has been a key source of the escalation of trade imbalances in the euro area, which are widely seen as an important cause of the financial and economic crisis in the region. By pointing to the external source of these imbalances and the divergent institutional capacity of the euro area countries to deal with the intensified competition associated with the rise of the BICs, De Ville and Vermeiren go beyond the focus on the divergence in unit labor costs as the driving force of these imbalances. As such, this book provides a comprehensive policy critique of the EU’s export-led growth strategy based on declining unit labor costs.

Download or read book The Euro s Effect on Trade Balance Dynamics written by Mika Nieminen and published by . This book was released on 2015 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the pre-EMU period changes in real effective exchange rate or faster-than-trading-partners growth rates Granger caused changes in trade balance in most of the EMU-12 countries. However, our data driven article provides evidence that after the adoption of euro, these Granger causalities disappeared. We decompose trade balances into intra balances (trade balance vis-à-vis the euro area) and extra balances (trade balance vis-à-vis the rest of the world), and find that the disappearance of dynamic feedback effect typically occurred in the intra balances rather than in the extra balances. Our results imply that debtor countries cannot reduce their trade deficits in the short-run by enhancing price competitiveness or by adopting austerity policies. Only in Finland the trade balance has improved (or deteriorated) as a result of real effective exchange rate depreciation (or appreciation) during the EMU period.

Download or read book Trade Imbalances Within the Euro Area and with Respect to the Rest of the World written by Mika Nieminen and published by . This book was released on 2014 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many studies have explored the determinants of current account balances in Europe. However, only in a few studies have trade imbalances been decomposed into intra balances, trade balances vis-à-vis the euro area, and extra balances, trade balances vis-à-vis the rest of the world. In this paper, we apply this decomposition and augment the previous studies of this type by including a larger set of theoretically plausible explanatory variables derived from the current account literature. We observe that, contrary to Schmitz and von Hagen (2011), the introduction of common currency has not increased the elasticity of trade flows to per capita incomes within the euro area for the member countries. In addition, this framework reveals that there is significant heterogeneity among the usual determinants of trade balances whether those contribute to intra balances or extra balances.

Download or read book General Economics Monetary Policy written by Manfred Damsch and published by GRIN Verlag. This book was released on 2011-02 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research Paper (undergraduate) from the year 2008 in the subject Business economics - Economic Policy, grade: keine, University of applied sciences, Munich, language: English, abstract: For now more than 6 years, starting in 2002, the US-Dollar continuously depreciates in relation to the Euro but also in relation to other strong currencies in the world. The European System of Central Bank can help the dollar but not without affecting the Euro. A stable Euro with low and constant inflation of 2% is the main objective of the ECB and fixed in their statutes. The depreciation of the dollar can be blended by depreciating the Euro in the same relation but that won't help for long. The impacts on the domestic economy which consists of a range of multicultural states within the Euro Area would be unpredictable. At least high Inflation to the Euro would follow - with negative side effects to the European countries. Even if a weaker Euro (or stronger Dollar) would help the German exporters the problem of the Dollar is not caused by the strong Euro. Germany is still leading in foreign trade and increases its net-export even though the Euro gets stronger. Since more than 20 years the USA have increased their trade-deficit year on year. The solution for the weak dollar is not a weak Euro. Beside the trade-deficit the enormous costs for military interventions also charge the government budget and lately the population by inflation tax.

Download or read book Europe and Global Imbalances written by Philip R. Lane and published by International Monetary Fund. This book was released on 2007-06 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.

Download or read book Euro Area External Imbalances and the Burden of Adjustment written by Filippo di Mauro and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this paper is to explore the consequences of the correction of Euro area trade imbalances on real exchange rates. This analysis requires one additional dimension with respect to the standard Global Imbalances framework à la Obstfeld and Rogoff (2005), since the adjustment takes place within and outside the Euro area. Both types of adjustments are analysed in a three-country general equilibrium model with a tradable and a non-tradable sectors, and heterogeneous firms built upon Pappadà (2011). ECB (CompNet) data are used to measure the differences infirm size and productivity dispersion across Euro area countries. With respect to the surplus country (Germany), countries running a trade deficit (Spain, Italy) are characterised by a productivity distribution with a lower mean and a less fat right tail. This increases the relative price movement associated with the external adjustment because of the limited role played by the extensive margin. We show that the real exchange rate movements are underestimated when the cross-country differences in terms of productivity distributions are neglected.

Download or read book Current Account Imbalances in the Euro Area Draft Version written by Alan G. Ahearne and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dispersion in current account balances among countries in the euro area has widened markedly over the past decade-and-a-half, and especially since 1999. We decompose current account positions for euro area countries into intra-euro-area balances and extra-euroarea balances and examine the determinants of these balances. Regarding intra-euro-area balances, we present evidence that capital tends to flow from high-income euro area economies to low-income euro area economies. These flows have increased since the creation of the single currency in Europe. We construct a novel data set regarding extra-euro-area balances. The data set contains, for the euro area and the most important member economies, exports and imports to and from the 10 respective most important trade partners outside the euro area. This allows us to study the determinants of the extra-euro current account and its interaction with intra-euro area trade balances. We estimate a model of the trade balance of the euro area and individual euro-area countries with the rest of the world. We find that a real appreciation of the euro against the currencies of its main trading partners appears to have a substantial effect on the euro area's net exports in the long run, though the immediate effect is small. Our estimates for individual countries suggest that the adjustment to a real appreciation of the euro would not be equally distributed across euro-area countries. In particular, Germany would bear the largest share of the adjustment, while the other large euro-area economies would be relatively unaffected. Finally, we find that the introduction of the euro seems to have changed the dynamics of trade balance adjustment in three of the larger euro-area economies.

Download or read book European Trade and Growth Imbalances written by Peter McAdam and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The accumulated, persistent trade and economic imbalances between the South euro area (SEA) and theNorth euro area (NEA) countries brought about severe strains for the euro following the global financialcrisis of 2008. This paper assesses alternative scenarios suggested to restore the trade imbalances withinthe euro area. We employ a structural Bayesian Global VAR in which theory-consistent long- and short-runrestrictions are imposed. Empirical results show that a depreciation of the SEA real exchange rate and/or areduction of the SEA unit labor cost can lead to an improvement of the SEA trade balance through an increasein exports. Evidence also emerges that a negative demand shock in the SEA can also ameliorate the SEA tradebalance by boosting exports and reducing imports. Among the policies that could restore trade imbalancesin the SEA, austerity is less painful in terms of adjustment to long-run equilibrium. Counterfactual analysissignal that if policies - improved competitiveness and/or austerity in SEA - were pursued prior to 2010the European debt crisis could have been averted. Finally, a simple loss function exercise shows that apersistent contractionary demand shock in SEA will maximize the welfare of pan-European social-welfareplaner-policy maker.

Download or read book Catching Capital written by Peter Dietsch and published by Oxford University Press. This book was released on 2015-07-01 with total page 279 pages. Available in PDF, EPUB and Kindle. Book excerpt: Rich people stash away trillions of dollars in tax havens like Switzerland, the Cayman Islands, or Singapore. Multinational corporations shift their profits to low-tax jurisdictions like Ireland or Panama to avoid paying tax. Recent stories in the media about Apple, Google, Starbucks, and Fiat are just the tip of the iceberg. There is hardly any multinational today that respects not just the letter but also the spirit of tax laws. All this becomes possible due to tax competition, with countries strategically designing fiscal policy to attract capital from abroad. The loopholes in national tax regimes that tax competition generates and exploits draw into question political economic life as we presently know it. They undermine the fiscal autonomy of political communities and contribute to rising inequalities in income and wealth. Building on a careful analysis of the ethical challenges raised by a world of tax competition, this book puts forward a normative and institutional framework to regulate the practice. In short, individuals and corporations should pay tax in the jurisdictions of which they are members, where this membership can come in degrees. Moreover, the strategic tax setting of states should be limited in important ways. An International Tax Organisation (ITO) should be created to enforce the principles of tax justice. The author defends this call for reform against two important objections. First, Dietsch refutes the suggestion that regulating tax competition is inefficient. Second, he argues that regulation of this sort, rather than representing a constraint on national sovereignty, in fact turns out to be a requirement of sovereignty in a global economy. The book closes with a series of reflections on the obligations that the beneficiaries of tax competition have towards the losers both prior to any institutional reform as well as in its aftermath.

Download or read book Development in Turbulent Times written by Paul Dobrescu and published by Springer. This book was released on 2019-03-20 with total page 199 pages. Available in PDF, EPUB and Kindle. Book excerpt: This open access book explores the most recent trends in the EU in terms of development, progress, and performance. Ten years after the 2008 economic crisis, and amidst a digital revolution that is intensifying the development race, the European Union, and especially Central and Eastern Europe, are ardently searching for their development priorities. Against this background, by relying on a cross-national perspective, the authors reflect upon the developmental challenges of the moment, such as sustainable development, reducing inequality, ensuring social cohesion, and driving the digital revolution. They particularly focus on the relation between the less-developed Eastern part of the EU and its more developed Western counterpart, and discuss the consequences of this development gap in detail. Lastly, the book presents a range of case studies from different areas of governance, such as economy and commerce, health services, education, migration and public opinion in order to investigate the trends most likely to impact the European Union's medium and long-term development.

Download or read book Economic Imbalances and Institutional Changes to the Euro and the European Union written by Rajmund Mirdala and published by Emerald Group Publishing. This book was released on 2017-08-22 with total page 477 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book offers a critical perspective from which to observe evolution of the Euro Area and the European Union in these times of growing economic and political conflict.

Download or read book Changing Patterns of Global Trade written by Nagwa Riad and published by International Monetary Fund. This book was released on 2012-01-15 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: Changing Patterns of Global Trade outlines the factors underlying important shifts in global trade that have occurred in recent decades. The emergence of global supply chains and their increasing role in trade patterns allowed emerging market economies to boost their inputs in high-technology exports and is associated with increased trade interconnectedness.The analysis points to one important trend taking place over the last decade: the emergence of China as a major systemically important trading hub, reflecting not only the size of trade but also the increase in number of its significant trading partners.

Download or read book Global Trade and the Dollar written by Ms.Emine Boz and published by International Monetary Fund. This book was released on 2017-11-13 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that the U.S. dollar exchange rate drives global trade prices and volumes. Using a newly constructed data set of bilateral price and volume indices for more than 2,500 country pairs, we establish the following facts: 1) The dollar exchange rate quantitatively dominates the bilateral exchange rate in price pass-through and trade elasticity regressions. U.S. monetary policy induced dollar fluctuations have high pass-through into bilateral import prices. 2) Bilateral non-commodities terms of trade are essentially uncorrelated with bilateral exchange rates. 3) The strength of the U.S. dollar is a key predictor of rest-of-world aggregate trade volume and consumer/producer price inflation. A 1 percent U.S. dollar appreciation against all other currencies in the world predicts a 0.6–0.8 percent decline within a year in the volume of total trade between countries in the rest of the world, controlling for the global business cycle. 4) Using a novel Bayesian semiparametric hierarchical panel data model, we estimate that the importing country’s share of imports invoiced in dollars explains 15 percent of the variance of dollar pass-through/elasticity across country pairs. Our findings strongly support the dominant currency paradigm as opposed to the traditional Mundell-Fleming pricing paradigms.

Download or read book External Imbalances in the Euro Area written by Ms.Ruo Chen and published by International Monetary Fund. This book was released on 2012-10-09 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the extent to which current account imbalances of euro area countries are related to intra-euro area factors and to external trade shocks. We argue that the traditional explanations for the rising imbalances are correct, but are incomplete. We uncover a large impact of declines in export competitiveness and asymmetric trade developments vis-à-vis the rest of the world –in particular vis-à-vis China, Central and Eastern Europe, and oil exporters- on the external balance of euro area debtor countries. While current account imbalances of euro area deficit countries vis-à-vis the rest of the world increased, they were financed mostly by intra-euro area capital inflows (in particular by the purchase of government and financial institutions’ securities, and cross-border interbank lending) which permitted external imbalances to grow over time.

Download or read book The Economics of Monetary Unions written by Juan E. Castañeda and published by Routledge. This book was released on 2020-03-16 with total page 271 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this book, a historical analysis of the precedents of the euro is examined within the context of the current issues affecting the Eurozone and the long-term effects of the institutional changes implemented since 2010. The book begins by placing the Eurozone challenges in the historical context of previous monetary unions, drawing on the experience of the gold standard. It then specifically focuses on the problems arising from the running of permanent trade imbalances within the Eurozone. The authors explore the advantages and disadvantages of being a member of the Eurozone and attempt to measure the optimality of a currency area by the calculation of an index on internal macroeconomic asymmetries. They address the proposals recently made in favour of a fiscal union in the Euro zone; including the economic and political feasibility of fiscal transfers in the Eurozone. The final two papers discuss whether the monetary union is in fact more than just that, and whether it will lead inevitably to some form of political union if it is to survive. With chapters by leading experts from both Europe and the UK, this book will appeal to students in Economics, Finance, Politics, EU integration and European studies; as well as academics and professional economists doing research in EU integration, the Euro zone, monetary history and monetary and banking unions in Europe, the UK and elsewhere.