Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/303373 
Year of Publication: 
2015
Series/Report no.: 
LEQS Paper No. 90
Publisher: 
London School of Economics and Political Science (LSE), European Institute, London
Abstract: 
Current account (CA) dispersion within European Union (EU) member states has been increasing progressively since the 1990s. Interestingly, the persistent deficits in many peripheral countries have not been accompanied by a significant growth process able to stimulate a long run rebalancing as neoclassical theory predicts. To shed light on the issue this paper investigates the determinants of Eurozone CA imbalances, focusing on the role played by financial integration. The analysis considers two samples of 22 OECD and 15 EU countries, three time horizons corresponding to various steps in European integration, different control variables and several panel econometric methods. The results suggest that within the OECD and EU groups, financial integration contributed to explain CA deterioration in the peripheral countries especially in the post-EMU period. The business cycle seems to have played a growing role over time, whereas the role of competiveness seems to have diminished with respect to the past.
Subjects: 
current account imbalances
financial integration
EMU
core-periphery countries
panel econometric models
JEL: 
F36
F43
Document Type: 
Working Paper

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