Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104636
Authors: 
Ehmer, Philipp
Year of Publication: 
2014
Series/Report no.: 
Diskussionspapiere, Wirtschaftwissenschaftliche Fakultät, Universität Witten, Herdecke 27/2014
Abstract: 
The measures implemented to reduce current account deficits within several euro area econ-omies are aimed at boosting competitiveness to raise exports. Due to low industrial capacities in Greece, Portugal and Spain, for instance, it is questionable, however, whether exports can contribute much to the required turnaround of the current account. The existing literature on current account determinants ignores the impact of economic structure. However, as industrial goods are more tradable than services, a specialisation on manufacturing industries should ceteris paribus lead to an improved current account. The empirical analysis of this paper con-firms a significant impact of the sectoral focus on the current account within the euro area. Hence, the turnaround in crisis-hit economies has to be accomplished mostly through imports. As can be observed, this brings about severe recessions - more severe than in manufacturing-based economies which use the exports channel to a larger extent. Within a currency union where there is no depreciation which facilitates the adjustment economies should aim at har-monising their economic structure regarding export capacity.
Subjects: 
euro area
current account imbalances
current account determinants
savings rate, economic structure
sectoral focus
optimum currency area
JEL: 
E21
F32
F41
L16
O14
Document Type: 
Working Paper

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