Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148371
Authors: 
Bajo-Rubio, Oscar
Berke, Burcu
Esteve, Vicente
Year of Publication: 
2016
Citation: 
[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 10 [Issue:] 2016-30 [Pages:] 1-27
Abstract: 
According to conventional wisdom, 'peripheral' Southern European members of the euro area (Greece, Italy, Portugal and Spain) suffer from a problem of competitiveness. Since their membership of the euro area renders devaluation impossible, adjustment should come through decreasing wages and prices in these countries, which, by improving the trade balance, should lead to a recovery of previous levels of employment and growth. In this paper, the authors estimate trade balance equations for the Southern European countries, both for total trade and for the trade performed with the European Union, taking three alternative measures of the real exchange rate, based on consumption price indices, export prices and unit labour costs, respectively. Their main conclusion is that demand seems to be more relevant than relative prices when explaining the evolution of the trade balance.
Subjects: 
trade balance
real exchange rate
competitiveness
JEL: 
F31
F41
F45
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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